Appeal from Circuit Court of Sangamon County No. 09MR349 Honorable John W. Belz, Judge Presiding.
The opinion of the court was delivered by: Presiding Justice Knecht
PRESIDING JUSTICE KNECHT delivered the judgment of the court, with opinion.
Justices Steigmann and Cook concurred in the judgment and opinion.
Plaintiff, Interstate Trucks, LLC, appeals the decision of the Illinois Department of Revenue (Department) affirming the Department's issuance of four notices of tax liability in the amount of $1,000 per notice for plaintiff's failure to obtain and display single-trip permits as required under section 13a.5 of the Motor Fuel Tax Law (Tax Law) (35 ILCS 505/13a.5 (West 2006)).
Plaintiff sought administrative review and the circuit court affirmed the Department. Plaintiff appeals, claiming the Department erred in the following respects: (1) it erred in its construction of section 13a.5 of the Tax Law because it held "a single trip through the State of Illinois" included trucks purchased and fueled in Illinois and then driven to Tennessee, and (2) it erred in not recognizing the exception established in section 1.16 of the Tax Law (35 ILCS 505/1.16 (West 2006)). For the following reasons, we reverse the circuit court's decision affirming the Department's decision.
Plaintiff was a truck dealer with its sole place of business in the State of Tennessee. In March 2007, plaintiff purchased five trucks from Central Illinois Trucks, Inc., located in Springfield, Illinois. These trucks were purchased for resale at plaintiff's dealership in Tennessee.
Later in March 2007, plaintiff arranged for its agents to transport the purchased trucks from Springfield, Illinois, to its dealership in Tennessee. In preparation for the transportation of the trucks, Central Illinois Trucks, Inc., provided the trucks with seven-day permits ($10 each) as required under section 3-811(c) of the Illinois Vehicle Code (625 ILCS 5/3-811(c) (West 2006)), "which were acquired by the seller, in bulk, from the Illinois Secretary of State." The seven-day permits allowed plaintiff to lawfully operate the trucks purchased in Illinois on Illinois highways. 625 ILCS 5/3-811 (West 2006).
When plaintiff's agents were transporting the trucks to Tennessee, four of the trucks were stopped by agents in the Department's Bureau of Criminal Investigations at mile post 46 on Interstate 57. As a result of the stop, the Department issued four notices of tax liability to plaintiff because plaintiff had failed to acquire motor-fuel-use-tax licenses (price dependent on whether reinstatement fee is due and whether applicant is required to post bond) or single-trip permits ($20 each) before transporting the trucks as required under sections 13a.4 and 13a.5 of the Tax Law (35 ILCS 505/13a.4, 13a.5 (West 2006)). The seven-day permits plaintiff had obtained for the trucks were not sufficient to cover any motor-fuel-use tax due.
Plaintiff protested the issuance of the notices of tax liability and requested a hearing with the Department. Prior to the hearing, the parties stipulated (1) plaintiff was a truck dealer having no place of business in the State of Illinois; (2) the trucks were purchased from Central Illinois Trucks, Inc., for resale at plaintiff's Tennessee dealership; (3) the trucks were stopped by the Department; (4) the trucks had seven-day permits issued by the Illinois Secretary of State to drive them from one dealership to another; (5) plaintiff was not a common carrier and not in the business of transporting persons or property for hire; (6) the vehicles in question were exiting the State of Illinois and traveling to plaintiff's business in the State of Tennessee; (7) the trucks in question were semi-tractors and not pulling any trailers or cargo; and (8) none of the trucks had motor-fuel-vehicle-tax licenses and display decals.
Additionally, prior to the hearing, the parties agreed Bruce Thomas, manager of Central Illinois Trucks, Inc., would not be called as a witness at the hearing and, instead, his testimony would be admitted into evidence through an affidavit. In the affidavit, Thomas stated in order to enable the transportation of the trucks, Central Illinois Trucks purchased approximately 30 gallons of fuel for each truck for a total of approximately 150 gallons of fuel. Three fuel receipts were attached to the affidavit, each showing the purchase of approximately 50 gallons of fuel. Further, the affidavit stated the trucks were equipped with sufficient fuel to drive from Springfield, Illinois, to Tennessee and, in particular, sufficient fuel to drive over the Illinois border to Paducah, Kentucky.
The hearing was held on November 13, 2008, in front of an administrative law judge (ALJ), who recommended affirming the issuance of the notices of tax liability. At the hearing, the Department argued plaintiff was required to have a single-trip permit affixed to each truck pursuant to section 13a.5 of the Tax Law. The Department also argued the single-trip permits were required because plaintiff met the definitions of "commercial motor vehicle" as set forth in section 1.16 of the Tax Law and "motor carrier" as defined in section 1.17 of the Tax Law (35 ILCS 505/1.16, 1.17 (West 2006)).
Further, the Department argued the admission of the fuel receipts into evidence was insufficient to prove the fuel for all five trucks was purchased in Illinois because two of the trucks would have been fueled at two different pumps. In particular, the Department noted only three receipts were admitted into evidence for five trucks, each receipt indicated approximately 50 gallons of fuel had been purchased, and Central Illinois Trucks purchased approximately 30 gallons of fuel for each truck. Additionally, the Department noted the vehicle identification numbers (VIN) written on the receipts matched the VINs of only two of the trucks in question. The Department argued these discrepancies undermined Thomas's credibility.
In contrast, plaintiff argued the single-trip permits were not required because (1) section 13a.5 of the Tax Law did not apply because the Illinois trucks were bought and fueled in Illinois, the retail tax for the fuel purchases was paid in Illinois, and the trucks exited Illinois; (2) plaintiff did not operate the trucks for a single trip through Illinois, or from a point on the border to a point within Illinois and then return to the border as required under section 13a.5 of the Tax Law; and (3) ...