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04/19/96 ILLINI MEDIA COMPANY v. ILLINOIS

April 19, 1996

ILLINI MEDIA COMPANY, AN ILLINOIS NOT-FOR-PROFIT CORPORATION, PLAINTIFF-APPELLEE,
v.
THE ILLINOIS DEPARTMENT OF REVENUE, DEFENDANT-APPELLANT.



Appeal from Circuit Court of Champaign County. No. 94L1002. Honorable George S. Miller, Judge Presiding.

Released for Publication April 19, 1996. As Corrected August 28, 1996.

Honorable Rita B. Garman, J., Honorable Robert J. Steigmann, J., Honorable John T. McCULLOUGH, J., Concurring. Justice Garman delivered the opinion of the court:

The opinion of the court was delivered by: Garman

The Honorable Justice GARMAN delivered the opinion of the court:

This case involves a dispute with respect to a property tax exemption. Plaintiff, Illini Media Company (Illini Media), owns three parcels of land. It sought exemption from 1990 property taxes under section 19.1 of the Revenue Act of 1939 (Act) (Ill. Rev. Stat. 1989, ch. 120, par. 500.1; see 35 ILCS 205/19.1 (West 1992)). Section 19.1 of the Act exempted property used for educational purposes. The primary use of the property-educational versus noneducational-is the crux of this appeal. Defendant Illinois Department of Revenue (Department) denied the exemption. Illini Media then sought judicial review. A circuit court reversed the Department's ruling. The Department appeals. We affirm in part, reverse in part, and remand.

I. BACKGROUND

Illini Media is a multimedia not-for-profit corporation, serving the community of the University of Illinois at Urbana-Champaign. It operates a radio station, and publishes the university newspaper, The Daily Illini, the university yearbook, and a technical journal. Before 1988 it operated from a university-owned building. In 1988 it purchased the first of the three parcels at issue and since moved most of its operations there (the radio station remained on campus).

Illini Media was incorporated, under a different name, in 1911, by the president of the university. At present, its corporate purposes are "to publish and distribute student publications, to educate University of Illinois at Urbana-Champaign students in the field of mass communications, and to operate other related student enterprises in the field of mass communications."

All activities of Illini Media are subject to the authority of the chancellor of the university. Membership on the board of directors of this not-for-profit corporation is limited to university students and faculty members, who serve without pay. Its workers are a few paid staff and over 700 unpaid students.

All student staff must be full-time students. Students do not receive credit for their employment. All publications rely on advertising and subscriptions or sales for their income.

Previously, the Department had found that Illini Media operated exclusively for educational purposes. The Department also had exempted Illini Media from the retailers' occupation tax, service occupation tax, use tax, and service use tax because it had held that Illini Media was organized and operated exclusively for educational purposes. Yet another item in the record is a ruling of the National Labor Relations Board, refusing to assert its jurisdiction after concluding that the activities of Illini Media were so intimately connected with the university's role of educating students as to be indistinguishable, and that any commercial activities of Illini Media were secondary to its educational function. The university vice-chancellor acknowledged that Illini Media's activities were interrelated to the overall educational mission of the university and directed toward, and beneficial to, the student body.

II. ANALYSIS

A. Waiver

The Department first argues that Illini Media waived its right to claim an exemption under section 19.1 of the Act, by virtue of its alleged reliance on section 19.7 of the Act (Ill. Rev. Stat. 1989, ch. 120, par. 500.7) in its argument to the Department. Section 19.1 deals with educational uses, while section 19.7 ...


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