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W.L. Miller Co. v. Zehnder

July 31, 2000

W.L. MILLER COMPANY, PLAINTIFF-APPELLEE,
v.
KEN E. ZEHNDER, DIRECTOR OF THE ILLINOIS DEPARTMENT OF REVENUE, AND THE STATE OF ILLINOIS, DEFENDANTS-APPELLANTS.



Appeal from Circuit Court of Sangamon County No. 98MR104 Honorable Donald M. Cadagin, Judge Presiding.

The opinion of the court was delivered by: Justice Steigmann

In August 1991, the Illinois Department of Revenue (Department) audited plaintiff, W.L. Miller Company (Miller). Miller subsequently paid use taxes as directed by the auditor but under protest. In October 1991, Miller filed a formal claim (hereinafter original claim) seeking a credit and refund of $14,392 for use tax that it had paid on several vehicles that it alleged were subject to the "rolling stock exemption" set forth in sections 3-55(b) and 3-60 of the Use Tax Act (Act) (Ill. Rev. Stat. 1991, ch. 120, pars. 439.3-55(b), 439.3-60 (now 35 ILCS 105/3-55(b), 3-60 (West 1998))). In May 1996, Miller filed an additional claim (hereinafter second claim) for credit against the use tax that it paid on machinery and vehicle parts, alleging that these items were also subject to the rolling stock exemption.

In January 1998, the Department Director adopted the recommendation of the administrative law judge (ALJ) and granted the Department's summary judgment motion as to Miller's second claim upon concluding that it was barred by the three-year statute of limitations set forth in section 21 of the Act (Ill. Rev. Stat. 1991, ch. 120, par. 439.21 (now 35 ILCS 105/21 (West 1998))). Miller sought administrative review, and in October 1998, the circuit court reversed the Department's decision and remanded the case for determination of the amount of refund due Miller.

On remand, the parties stipulated that (1) the Department did not waive its right to appeal the circuit court's decision on the statute of limitations issue, and (2) the allowable amount of Miller's claim for credit on vehicle parts was $4,551. In September 1999, the court granted judgment for $4,551 in favor of Miller.

The Department appeals, arguing that (1) the ALJ correctly determined that the three-year statute of limitations bars Miller's second claim; and (2) the trial court erred in concluding that (a) Miller's August 1991 letter, stating it was paying the tax under protest, constituted a "claim for credit" and (b) the Department was estopped from barring Miller's claim. We reverse.

I. BACKGROUND

In August 1991, the Department audited Miller, a highway and heavy road construction company. As a result, the Department determined that Miller owed use tax on certain vehicles, vehicle parts, and machinery it purchased during the audit period, July 1988 to June 1991.

In August 1991, Miller mailed its payment of the use tax to the Department. Enclosed with that payment was a letter explaining that Miller disagreed with the Department's interpretation of the rolling stock exemption and was paying the tax under protest. In the letter, Miller stated that the items in question included "dump trucks, pup trailers, lowboy, some repair parts, tires, etc." Miller also requested that the Department send it the necessary form for filing a claim for credit.

In October 1991, Miller filed its original claim for a credit of $14,392, which represented $11,577 for nine vehicles and $2,815 in interest.

In June 1994, the Department entered a tentative denial of Miller's original claim. Miller then filed a notice of protest, which was forwarded, along with the denial notice, to the Department's administrative hearings division.

In April 1996, a hearing on Miller's original claim was held at which Miller's attorney sought to amend its original claim to include a claim for credit on use taxes it paid on (1) machinery and equipment used in its asphalt operations and (2) vehicle repair parts. The ALJ advised Miller's attorney to submit those claims to the Department, and the hearing proceeded on Miller's original claim only. In October 1996, the ALJ entered a recommendation for disposition on Miller's original claim, recommending that the Department deny it as to two of the vehicles but grant credits on the remaining seven. In November 1996, the Director adopted the ALJ's recommendation.

Meanwhile, in May 1996, Miller filed its second claim, seeking a $13,781 credit on asphalt machinery and a $14,921 credit for vehicle parts. In July 1996, the Department entered a tentative denial of Miller's second claim, and in November 1996, Miller filed another protest.

In November 1997, the Department filed a motion to dismiss Miller's second claim. The Department argued that (1) the second claim was barred by the Act's three-year statute of limitations on claims for credit or refund (Ill. Rev. Stat. 1991, ch. 120, par. 439.21 (now 35 ILCS 105/21 (West 1998))) and (2) the second claim could not be considered an amendment to the original claim because the second claim sought additional amounts for items of tangible personal property not included in the original claim.

Miller responded that the statute of limitations did not apply because Miller filed the second claim before the Department ruled on its original claim and both of the claims related to the same exemption. Miller further argued that the Department should be estopped from barring its second claim because (1) the ALJ granted Miller ...


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