Illinois State Tax Update - January 2017

The Illinois Supreme Court in Hertz Corporation, et. al. v. City of Chicago ruled unconstitutional the expansion of the Chicago personal property lease transaction tax to vehicle rentals in the Chicago suburbs when a Chicago resident was involved. The court held that the city did not have extraterritorial jurisdiction to regulate and tax the suburban rentals based on a mere presumption that a Chicago resident may have used the car in the city after the rental.

In Iwan Ries & Co., et al. v. City of Chicago, the Illinois Cook County Circuit Court held that the new Chicago tobacco products tax on cigars and chewing tobacco was illegal. The court concluded that a state law passed in 1993 specifically preempted this new tax and held that the city's argument that its passage of a cigarette tax prior to 1993 somehow legalized the passage of the new tobacco products tax was contrary to the wording of the law.