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Rentra Liquor Dealers, Inc. v. Dept. of Revenue

JANUARY 22, 1973.




APPEAL from the Circuit Court of Cook County; the Hon. RAYMOND S. SARNOW, Judge, presiding.


Rehearing denied February 27, 1973.

The Department of Revenue of the State of Illinois (herein after the "Department") made corrected assessments of Retailers' Occupation Tax (ROT) and Municipal Retailers' Occupation Tax (MROT) for the following periods in the specified amounts against appellant, Rentra Liquor Dealers, Inc.:

Exhibit Tax Tax Penalty Total No. Act 2A ROT $2,301.13 $230.11 $2,531.24 2B MROT $328.76 $32.88 $361.64 2C ROT $6,456.58 $322.83 $6,779.41 2D MROT $889.58 $44.48 $934.06

Exhibits 2A and 2B covered the tax period from January 1, 1965 to June 30, 1965. Exhibits 2C and 2D covered the tax period from July 1, 1965 to October 31, 1967.)

The assessments were reviewed by the circuit court of Cook County which entered an order denying taxpayer the relief requested in its amended complaint and affirming the Department's determination.

Taxpayer then appealed to the Supreme Court pursuant to Rule 302(a)(1). (Ill. Rev. Stat. 1969, ch. 110A, par. 302(a)(1).) The Supreme Court transferred the appeal to this court. (Ill.Sup.Ct. Doc. No. 43231, November Term, 1971).

The taxpayer, Rentra Liquor Dealers, Inc., an Illinois corporation, is located at 8001 South Ashland Avenue, Chicago. The Department corrected the returns of the taxpayer based on "information received from reliable sources" and made the above delineated corrected assessments.

Thereafter, the Department prepared and dispatched to taxpayer its notices of tax liabilities reflecting taxpayer's additional tax liabilities, penalties and interest, based on the amounts set forth hereinabove. Taxpayer protested the notices of tax liabilities and hearings thereon were scheduled.

The original hearing on the notices of tax liabilities was scheduled for July 1, 1968, and again on August 5, 1969, pursuant to notices sent to the taxpayer by certified mail. Because these notices were returned to the Department "not served," another hearing was scheduled for September 10, 1968, and notice thereof was personally served on taxpayer's President, George Artner, on August 22, 1968.

The hearing was conducted by the Department on September 10, 1968, and the Department's prima facie case was presented at the scheduled time of 10:00 A.M. The Department was represented by the hearing referee and no one appeared on behalf of the taxpayer. The Department offered and admitted into evidence its Exhibit Numbers 1 through 10 (letter appointing hearing referee, corrections of returns, notices of tax liabilities, taxpayer's protests, and notices of hearings). The Department rested and the case was concluded on a default.

At approximately 11:30 A.M. on September 10, 1968, taxpayer's attorney appeared and the referee again called this matter pursuant to his request. The referee stated for the record that after the Department had admitted into evidence its prima facie case, the Department received a telephone call from the taxpayer's attorney requesting a continuance due to the fact that he was in court and detained with another matter at the time this cause was initially heard. No evidence or testimony was presented but taxpayer's attorney represented that the taxpayer had wholesale sales (which would not be subject to taxation) and needed time to secure affidavits. The matter was then continued.

On November 15, 1968, the matter was again heard. Taxpayer appeared by its attorney and by its President, George Artner and the Department appeared by the hearing referee. Taxpayer's attorney objected to the Department's prima facie case on numerous grounds including the fact that he was not present when it was introduced and, therefore, could not make objections. A written copy of the transcript and the original of all exhibits were given to the attorney to review. Taxpayer's attorney requested that a new record be made of the prima facie case because he was not present. The Department denied this request but offered to allow him to make any objections for the record. Objection was made to Department's Exhibits 2A, 2B, 2C and 2D on the ground that the exhibits were based on "information received from a reliable source" which taxpayer alleged was hearsay and that the Department's representative who prepared the exhibits was not present to be cross-examined. Objection was made to the prima facie case since it was based on Exhibits 2A, 2B, 2C and 2D. All objections were overruled by the hearing referee.

Over taxpayer's objection, the taxpayer then proceeded to present its defense to the Department's prima facie case. Taxpayer called Father Raymond J. Gerrity as a witness. Father Gerrity testified that from January 1, 1956 to the end of May 1966, that he was assistant pastor of Little Flower Church in Chicago and that he helped the pastor make purchases; that purchases were made from Rentra Liquor Dealers, Inc., every month while he was there. The witness further testified that if any records of purchases were kept, the pastor kept them and that he had died prior to the hearing and the records, if any, were unavailable. Father Gerrity testified that the purchases consisted of alcoholic beverages, soft drinks, cigarettes and wines for "official dinners and cocktails." He did not testify concerning the amounts of the purchases. Taxpayer's President, George Artner on this point, testified that he sold an average of $1,000 per month to Little Flower Church and that he kept these sales on daily sheets but that he ...

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