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06/22/87 the Village of Niles, v. K Mart Corporation

June 22, 1987

THE VILLAGE OF NILES, PLAINTIFF-APPELLANT

v.

K MART CORPORATION, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FIRST DIVISION

511 N.E.2d 703, 158 Ill. App. 3d 521, 110 Ill. Dec. 526 1987.IL.858

Appeal from the Circuit Court of Cook County; the Hon. Joseph M. Wosik, Judge, presiding.

APPELLATE Judges:

JUSTICE CAMPBELL delivered the opinion of the court. QUINLAN, P.J., and BUCKLEY, J., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE CAMPBELL

Plaintiff, the village of Niles (Niles), brought an action seeking an accounting and the imposition of a fine against defendant, K mart Corporation (K mart), as a result of errors on K mart's sales tax returns which caused the Illinois Department of Revenue to pay to other municipalities amounts which should have gone to Niles. The trial court granted K mart's motion to dismiss and Niles now appeals from the dismissal order contending that a municipality has a right to bring an action against a retailer to recover sales taxes and fines due under the Municipal Retailers' Occupation Tax Act (MROT Act) (Ill. Rev. Stat. 1983, ch. 24, par. 8-11-1). 1

The complaint filed by Niles alleged that K mart negligently reported to the Illinois Department of Revenue that certain sales of personal property at retail took place in the municipalities of Des Plaines and Oak Lawn when, in fact, such sales took place within Niles. The erroneous returns were filed during a period from April 1970 until February 1983. As a result of the erroneous returns submitted by K mart, the complaint charged that the Illinois Department of Revenue forwarded to the municipalities of Des Plaines and Oak Lawn sales tax monies properly due Niles in excess of $2 million. The complaint sought to compel K mart to again pay the taxes as well as the imposition of a $500-per-day fine for a period of 13 years.

The MROT Act empowers municipalities to impose a tax not in excess of 1% on sales of tangible personal property within the municipality. The tax is not collected by the municipality or paid directly to it. Rather, the Illinois Department of Revenue collects the tax from retailers and the State Treasurer disburses to each municipality the amount corresponding to collections attributable to it. The powers, rights, remedies and procedures to be applied by the Illinois Department of Revenue in enforcing the MROT Act are the same as those provided under the Retailers' Occupation Tax Act (ROTA Act) (Ill. Rev. Stat. 1983, ch. 120, par. 440 et seq.),which outlines the provisions for the administration and collection of the State sales tax. (See Ill. Rev. Stat. 1983, ch. 24, par. 8-11-1.) In July 1967, Niles enacted a 1% sales tax pursuant to the MROT Act.

On appeal, Niles contends that the trial court improperly dismissed its complaint since it can hold K mart accountable for its failure to pay taxes due Niles under the MROT Act. K mart responds that the remedies and procedures to be applied under the MROT Act are the same as those provided under the ROTA Act and that Act does not provide the relief requested by Niles.

It is well settled that the rights of the parties here, the taxing body, the retailer, and the Department of Revenue, are created by and delineated in the applicable statute. "The levy, assessment and collection of taxes are purely statutory and the levy, assessment and collection of taxes can only be made as expressly pointed out in the statute." (People ex rel. Shirk v. Glass (1956), 9 Ill. 2d 302, 311, 137 N.E.2d 265, 270.) In determining the meaning of a grant of power to levy taxes, the statute is to be strictly construed and not extended beyond the clear import of the language used. Caterpillar Tractor Co. v. Department of Revenue (1963), 29 Ill. 2d 564, 194 N.E.2d 257; Jewel Cos. v. Department of Revenue (1978), 58 Ill. App. 3d 393, 374 N.E.2d 733.

Under both the MROT Act and the ROTA Act the administration and enforcement of the collection of taxes is vested in the Department of Revenue. The municipality does not act as the collecting agent. The MROT Act states in pertinent part:

"The tax imposed by a municipality pursuant to this Section and all civil penalties that may be assessed as an incident thereof shall be collected and enforced by the State Department of Revenue. . . . The Department shall have full power to administer and enforce this Section . . ..

. . . The corporate authorities of any municipality which levies a tax authorized by this Section shall transmit to the Department . . . a certified copy of the ordinance or resolution imposing such tax whereupon the Department of Revenue shall proceed to administer and enforce this Section on behalf of such municipality." Ill. Rev. Stat. 1983, ch. 24, par. 8-11-1.

From our reading of this statute, we find no authority for Niles to enforce a tax directly against a retailer or to impose fines due from violations of the Act. The statute delineates the rights of a municipality to impose a tax up to the rate of 1% and imposes a duty to transmit the funds to the Department of Revenue for enforcement of the statutory provisions. In the case at bar, under the terms of the statute, it was the duty of K mart to file returns and provide other information required by the Department and to pay taxes to the Department. The record indicates that K mart complied with these statutory provisions. Plaintiff's complaint does not allege that defendant failed to pay the tax or that it violated any duty imposed on it by the statute. The liabilities, procedures and penalties which Niles seeks ...


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