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Heyman v. Mahin

OPINION FILED SEPTEMBER 30, 1971.

GLENN R. HEYMAN, TRUSTEE, APPELLANT,

v.

GEORGE E. MAHIN, DIRECTOR OF REVENUE, ET AL., APPELLEES.



APPEAL from the Circuit Court of Cook County; the Hon. THOMAS DONOVAN, Judge, presiding.

MR. JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 24, 1971.

This is an appeal from the circuit court of Cook County which upheld the constitutionality of the graduated discounts allowed to distributors under the Cigarette Tax Act. Ill. Rev. Stat. 1969, ch. 120, par. 453.2.

F.W. Koenecke and Son, Inc. filed an amended complaint which seeks a declaration that the 1963, 1965, 1967 and 1968 amendments to section 2(b) of the Cigarette Tax Act are unconstitutional as violating the uniformity provision of section 1 of article IX of the Illinois constitution and the equal protection clause of the fourteenth amendment of the Federal constitution. The plaintiff seeks to recover sums of money paid to the State under protest. The defendants, the Director of the Department of Revenue, the State Treasurer and the Attorney General filed a motion to dismiss. Glenn R. Heyman, as trustee in bankruptcy of plaintiff, was permitted to intervene in the cause on behalf of the plaintiff and to adopt the amended complaint as his pleading. The circuit court found each of the amendatory acts to be constitutional and dismissed the amended complaint. This appeal is from that judgment, pursuant to Rule 302(a)(2), then in effect.

The Cigarette Tax Act as originally enacted in 1941 levied a tax on persons engaged in business as distributors of cigarettes in the State measured by the number of cigarettes sold or otherwise disposed of in this State in the course of such business and allowed each distributor a 5% discount on the amount of tax paid to the State. (Ill. Rev. Stat. 1941, ch. 120, par. 453.2.) In Johnson v. Daley, 403 Ill. 338, this court held the Cigarette Tax Act to be an occupation tax and in Mutual Tobacco Co. v. Halpin, 414 Ill. 226, this court stated that the Cigarette Tax Act was a tax imposed on persons engaged in business as distributors of cigarettes in this State.

In 1963 the Act was amended and declared that the impact or incidence of the tax is on the retailer; however, under the amended Act the distributor continues to have the responsibility of affixing the tax stamps to the cigarette packages and is required to add the tax to the price of the cigarettes sold. Under the amendment any distributor who fails to properly collect and pay the tax imposed is liable for the tax. Ill. Rev. Stat. 1965, ch. 120, par. 453.2.

Under the 1963 amendment the flat 5% discount rate granted the cigarette distributors under the 1941 Act as amended was discontinued and replaced with a graduated declining discount rate measured by the dollar amount of the taxes paid by the distributor in any year commencing July 1 and ending June 30 of the following year. (Ill. Rev. Stat. 1963, ch. 120, par. 453.2(b).) The discount rate schedule adopted in 1963 and its revisions in 1965 and 1967 are as follows:

1963 Amendment

First $700,000 of tax paid - 5% discount Second $700,000 of tax paid - 4% discount Third $700,000 of tax paid - 3% discount All additional tax paid - 2% discount

1965 Amendment

First $700,000 of tax paid - 2-6/7% discount Second $700,000 of tax paid - 2-2/7% discount Third $700,000 of tax paid - 1-5/7% discount All additional tax paid - 1-1/7% discount

1967 Amendment

First $700,000 of tax paid - 2-2/9% discount Second $700,000 of tax paid - 1-7/9% discount Third $700,000 of tax paid - 1-1/3% discount All additional tax paid - 8/9% of 1% discount

The 1968 amendment continued the discount rate of the 1967 amendment. Section 2(b) of the Act in regard to the schedule of discounts states: "(b) The distributor shall be required to collect the taxes provided under paragraph (a) hereof, and, to cover the costs of such collection, shall be allowed a ...


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