RTA attempts to lift lid on alleged tax schemes
BY ROSALIND ROSSI Transportation Reporter firstname.lastname@example.org January 16, 2013 4:12PM
Sycamore, Illinois population sign. The RTA will file a lawsuit claiming United and American Airlines use tiny offices in remote Sycamore, Illinois, to purchase billions of dollars in aviation fuel for use at O'Hare and Midway in order to avoid paying higher Cook County sales taxes.
Updated: February 19, 2013 2:11PM
New tax information should be posted online by June to help lift the lid on tax dodge schemes like those United and American Airlines are accused of running out of tiny Sycamore, RTA officials said Wednesday.
A RTA suit filed Monday accused United of operating a sham office in Sycamore to avoid paying higher taxes for jet fuel purchases from their actual offices in Chicago. The RTA made similar accusations against American but said it was deferring legal action against that airline while American is tied up in bankruptcy proceedings.
“There are hundreds of companies, if not thousands, who are doing this,’’ RTA Board Chairman John Gates Jr. told reporters after Wednesday’s monthly RTA meeting.
“That is big money that can have a tremendous impact over the transit system in the six-county area.’’
On Wednesday, Gates and RTA Chief of Staff Jordon Matyas revealed that under a new law, the Illinois Department of Revenue is requiring all municipalities to disclose all tax rebate agreements they hold, and with which companies — information the department will post online by June.
“When we get that information, it will be prima facie evidence of how big this is,’’ Gates said. “We’ll have all the facts, and I think the facts are going to be very compelling.’’
In addition, Matyas said that at least one other airline is expected to be identified as participating in a similar scheme as part of a suit the RTA filed involving Kankakee and Channahon.
A United spokesperson called the suit “without merit. The operation of our fuel subsidiary in Sycamore has been examined by tax authorities in the past and has been determined to comply with all applicable laws. We will vigorously defend ourselves against these claims.”
An American Airlines spokesperson likewise insisted its “fuel purchasing process is permitted under Illinois law.’’
The RTA contends United and American have deprived Chicago and Cook County taxpayers, as well as transit agencies, of nearly $300 million over seven years by establishing “sham rural offices.”
RTA officials said they are hoping a video released on RTAchicago.com will explain the scheme and convince the public and legislators of the need to tighten up the law further.
“We’re hoping it will go viral,’’ CTA executive director Joe Costello said of the video.