The annual award is given to a retailer not only successful in business, but committed to community and civic affairs and respected in the industry. Illinois State Representative Kevin McCarthy (D-Orland Park) nominated the company for the honor.

Now in its 50^th year, the family-owned retail business has seven stores across Chicagoland and serves as the area’s leader in home recreation and holiday goods. It is led by founder and CEO Bob Jones, Sr., and his son, Company President Bob Jones, Jr.

“American Sale is a great example of how true passion translates into success in the retail industry,” said IRMA President & CEO David F. Vite.

By keeping a close eye on his market, embracing change and focusing on 110 percent customer service, the elder Jones succeeded in growing one of the state’s most unique retail businesses. In the spring and summer, its stores are stocked with pools, spas and patio furniture. But each autumn, American Sale becomes a holiday superstore with trees, wreaths, ornaments and lighting. Many customers simply know it as “the Christmas store.”

A natural salesman with a sincere dedication to his customers, Jones has enjoyed taking care of people ever since he was a boy shining shoes in his father’s barbershop. He opened the business as a toy store in south suburban Dolton in 1960 with $1,500 in inventory and a $35 cash register. In 1986 he stopped selling toys, focusing instead on home recreation and holiday merchandise.

Jones takes pride in selecting the best quality products from across the globe and offering them to his customers at the lowest possible prices. They are shipped directly to the company’s 215,000 square-foot warehouse in Tinley Park and delivered to the customer without outside help. Maintaining control over quality and condition of the merchandise has resulted in a 97 percent customer satisfaction rate.

American Sale employs a staff of 250, many of whom have worked there 20 or 30 years. The company gives back generously to the community, supporting Catholic schools, the American Cancer Society and Alzheimer’s research among other charities. Jones, Sr. served as an Economic Development Commissioner in Tinley Park for three years and Bob Jones, Jr. currently serves on IRMA’s Board of Directors.

The company has stores in Bridgeview, Lansing, Merrillville, IN, Naperville, Orland Park, Romeoville and Tinley Park.

Based on reports across the state, customer traffic was heavy and sales volume high on Friday, Saturday and Sunday as shoppers saved 5 percent on their purchases of qualified clothing and footwear items up to $100 and unlimited school supplies.

Because tax holidays ended in Iowa on Saturday and Missouri on Sunday, Illinois will begin a seven-day period with the Midwest’s lowest sales tax on clothing, footwear and school supplies. From now through Sunday, Aug. 15, Illinois retailers expect more out-of-state shoppers to cross the border for the tax savings.

The sales tax exemption offers savings for everyone – not just students – as consumers of all ages are able to purchase up jeans, skirts and shoes minus the 5 percent state sales tax.

“It’s only called a ‘Back-to-School’ tax holiday because of the time of year,” IRMA President & CEO David F. Vite said. “There is something for everyone on the long list of qualified items.”

Most clothing and footwear is exempt, except for clothing accessories such as handbags and hair notions and footwear such as football spikes and roller blades. Tax-exempt school supplies include binders, notebooks and calculators, but do not include computers, PDAs and cameras.

A complete list of qualified items is available at http://tax.illinois.gov.

While the tax holiday is saving people money, it is also providing a boost to retail businesses and increasing the demand for retail jobs. The 10-day tax break will likely help state revenues too as consumer shopping rises across all categories – not just tax exempt items.

Aug. 5, 2010

By KATHY CICHON

If you keep meaning to tackle that lengthy shopping list of back to school supplies, this weekend is a good time to start.

Not only does school start in Downers Grove later this month, but beginning Aug. 6, Illinois is implementing a sales tax holiday on school supply and back to school clothing purchases. The holiday runs through Aug. 15.

“Families in Illinois will see a 5 percent discount on their receipt because we won’t be collecting the state portion of the sales tax,” said Susan Hofer, spokesperson for the Illinois Department of Revenue.

Consumers don’t have to do anything special to receive the tax break — it’s calculated by the merchant. And anyone, whether in school or not, is eligible.

“Frankly, we don’t have an age limit set,” Hofer said.

So anyone can buy clothing or supplies on the list — children, college students, parents, etc. — and benefit from the tax holiday.

“If you need a ruler at home, that week would be a good week to get one,” Hofer said.

While some states offer the holiday for a week or weekend, Illinois chose to have the holiday run for 10 days to cover two weekends, Hofer said.

“We sure hope that it’s a busy week,” said David Vite, president and CEO of the Illinois Retail Merchants Association.

IRMA, which represents more than 20,000 stores including independently owned and large chains, is estimating Illinois families will save at least $30 per family as a result of the tax holiday.

“Retailers are going to be having promotions on top of that,” Vite said.

On July 7 the governor signed a bill allowing for a sales tax holiday on most required school supplies — such as pens, pencils, paper, crayons, etc. — as well as clothing and footwear priced under $100.

“This is an incentive of his to make sure families can afford to get their children to school with the supplies they need,” Hofer said.

A detailed list of what is covered by the holiday and what is not can be found at www.revenue.state.il.us/SalesTaxHolidayList.pdf

“Clearly there are some difficult definitional issues,” Vite said, citing the question of whether football shoes are covered. “In this instance, cleated sports shoes are not, but running shoes are.”

The state posted an updated list of what is covered under the sales tax holiday after fielding questions about whether supplies for after-school sports and activities are covered.

“And they’re not,” Hofer said.

Big ticket items such as computers and computer equipment are also not covered by the holiday.

“Schools very rarely require children to have computers,” Hofer said.

Hofer said shoppers should remember it is required supplies that children use at school and the type of clothing they would wear to school that are on the approved list.

“If parents and guardians keep those two things in mind, then they’re probably covered by the sales tax holiday,” Hofer said.

“The interesting thing is we’ve never done this before so we don’t know how many people will be buying” something just because of the sales holiday program, he said.

and that’s simply for back to school “so we’ll be watching this very closely,” Hofer said.

The state will not know how much revenue is lost from the sales tax holiday until the end of September, as retailers pay their August sales tax in September, she said.

Merchants are hoping the holiday translates to additional traffic and spending by consumers.

“One of the things we thought is perhaps that extra 5 percent (in savings) might be used to buy some of the things that are nice to have, but aren’t required,” Hofer said.

“If Florida is a barometer at all, we would expect that there would be close to $1 billion of extra activity in Illinois over the period of time,” Vite said.

IRMA has cited a study of the Florida sales tax holiday by the Washington Economics Group, which showed the tax holiday has a positive economic impact, increasing gross sales by about 8 percent for the month in which it is held.

According to the WEG analysis, after eight years of tax holidays, Florida missed out on revenue when it didn’t have the holiday in 2008 and 2009. If Florida had held a tax holiday in 2009, WEG said it would have represented an increase in economic activity of about $1.7 billion, boosting Florida’s gross domestic product by close to $1 billion for the year. The tax holiday also would have resulted in a net increase of $118 million in state and local taxes as a result of increased economic activity.

The holiday, Vite said, is a positive for consumers, businesses and municipalities. Unlike tax holidays in some states, the local portion of the sales tax remains in place.

“All of those increased sales are going to generate more for local governments,” Vite said.

Increased traffic at stores helps generate new jobs and overall sales tax revenues, he said.

The holiday also means that for the first time Illinois will be competitive with bordering states, he said. Iowa’s tax holiday runs for two days this weekend. Missouri’s lasts for three days. Wisconsin, Indiana and Kentucky don’t have holidays.

“We hope to get a lot of across-the-border sales as well,” Vite said.

18 states are having sales tax holidays, all of which have been successful, Vite said.

“So we have no doubt Illinois will be as well,” he said.

The governor agreed to a one-year trial of the holiday, “but if we’re successful we’re sure hoping we’ll be able to extend it year after year,” Vite said.

All of the dollars of savings do end up in the pockets of consumers, he said.

“The road to recovery in these difficult economic times is going to go through retail,” Vite said.

Seventy percent of the gross national product is through consumer spending, he said.

“The more we can move the needle upward, the better the economy is going to be,” he said.

Aug. 4, 2010

By Steve Tarter

Back-to-school shoppers will look for extra credit when they hit the stores this weekend.

That’s because in addition to the traditional sales offered at this time of year, customers won’t have to pay the state sales tax on certain supplies.

The sales tax holiday, an idea first started in Texas in 1999 and now spread to a host of states across the country, will be a first for Illinois, starting Friday and running through Aug. 15.

“This finally gives Illinois an advantage over its neighbors. States like Wisconsin, Indiana and Kentucky don’t offer any kind of sales-tax holiday, while Iowa and Missouri both do it, but only for the weekend,” said Rob Karr, senior vice president for the Springfield-based Illinois Retail Merchants Association.

But suspending the 5 percent state portion of the sales tax during this period won’t just help merchants located near the state’s borders, he said.

“The Illinois consumer – in Peoria and around the state – will clearly see the benefit. They say the average cost to prepare a child for school is $600. The suspension of the sales tax means you could save $30 per child. For families with several children, that adds up,” said Karr.

The tax holiday covers clothes, shoes, coats and school supplies, but computers, cell phones and most electronic equipment don’t qualify.

“It isn’t just retailers that will benefit but restaurants, gas stations and even hotels when people mount shopping expeditions,” Karr said.

Local governments still get their share of sales tax revenue and benefit further when more money is poured into the local economy, he said.

Karr noted the sales tax holiday has proved effective in other states. “Eighteen other states have seen tax holidays improve their economies. Florida skipped a holiday in 2009 after having them before and realized that the state lost over $100 million in revenue as a result.”

Area stores await the tax holiday with the same relish reserved for the December holidays.

“We’re bracing for activity. We’ve got special sales set up for the next two weekends,” said Bob Schertz, marketing manager for Northwoods Mall.

At Office Max, 4100 W. Willow Knolls Road, manager Joe Janusz also looks for shoppers to take advantage of the tax holiday.

“We’re going to see customers pretty excited when they see they can save 5 percent.

“It’s all about education for the event,” said Janusz, who noted that his store would clearly post what items qualify under the tax holiday.

At Target in Glen Hollow Shopping Center, department manager Chris Sayasane said some back-to-school shoppers didn’t wait for the tax break.

“Starting Sunday, we’ve seen heavy traffic in the store,” he said.

“Uniforms have really been selling well.”

Like Target, the J.C. Penney store at Northwoods Mall has beefed up staffing along with inventory.

“I went through this in Missouri. Tax holidays are just huge,” said Penney’s manager Rich Hudson.

The state’s decision to run the tax holiday for 10 days should prove beneficial, he said.

“It’s much better for the customer to have 10 days to shop,” said Hudson, adding that Penney’s is extending hours to 11 p.m. on Friday and Saturday during the holiday.

Sales tax holiday

The first sales tax holiday in Illinois will run from Aug. 6 through Aug. 15. During the holiday, the 5 percent portion of sales tax collected by the state will be waived. Local government sales taxes will continue to be collected. According to the Illinois Retail Merchants Association, the holiday applies to eligible school supplies, clothing and footwear with a retail price of less than $100. Computers, computer supplies, PDAs and cameras are not eligible.

Aug 3, 2010

By Dorothy Tucker

Dust off your shopping shoes, shine up the credit card, and get ready for the newest shopping holiday.

It’s the state’s tax free holiday that’s sure to rival Black Friday. It’s 10 days of no state sales tax. It’s a first for Illinois. CBS 2’s Dorothy Tucker reports on what qualified and what doesn’t for the 5 percent tax break.

For example, in Kankakee County, instead of 6.5 percent, you’ll pay 1.5 percent. In Lake County taxes drop from 7 percent to 2 percent. In Chicago, outside of downtown, instead of 9.75 percent, you’ll pay 4.75 percent.

“That’s a big savings,” said Kim Shackelford.

Since Shackelford typically spends $400 on back to school clothing and supplies, it’s an extra $20 in her pocket.

“I can wait until Friday and save that much more ’cause if I save I can buy an extra water bottle or socks,” said Shackelford.

The state’s offering the tax break to boost sales for retailers and help struggling consumers. It applies to items like skirts, dresses, pants, shoes and underwear.

“It’s any clothing item or footwear that’s under $100. So if you’ve got a new job and you’re in the market for clothing you can take advantage of the sales days as well,” said Tanya Triche, Senior Counsel Illinois Retail Merchants Association.

While most clothing is covered cosmetics, purses, and jewelry are not. Also on the no tax break list: computers, computer supplies and other electronics. But calculators are OK. In fact, almost anything you’ll need for the classroom gets a tax break.

“And there’s no dollar limit on the school supplies unlike the clothing where you’re limited to $100, it’s unlimited so you can get all the pens, paper, glue, all those things,” said Triche.

The list of what qualifies and what doesn’t is already in store computers, so you don’t have to worry about getting credit, but store mangers still expect consumers to have questions.

“So we have been kind of coaching our teams. We’ve given them copies of the actual state directions so they’ll be pretty well versed on it,” said Lee Crom, Target Store Manager.

Remember the tax break lasts for 10 days until August 15th. Some stores plan to open early and stay open late.

Kmart, on Addison, is open 24 hours, so the tax holiday starts Friday just after midnight.

Aug. 3, 2010

By SANDRA GUY

Shoppers who love early-bird specials may head out to local retailers opening as early as 6 a.m. Friday to promote their back-to-school deals and Illinois’ first sales-tax holiday.

The sales-tax holiday starts Friday and continues through Aug. 15 on select items. Shoppers will not be charged the 5 percent state sales tax on qualifying supplies, clothing and footwear.

“Illinois’ sales tax holiday, which proponents are touting as a much-needed break for budget-strapped families, sharply reduces the sales tax that stores must charge on back-to-school items,” said Bonni Pear, spokeswoman for Woodfield Mall.

Local sales taxes, such as those charged by the county and city, remain in effect. In Chicago, total sales tax is 9.75 percent, so it will be 4.75 percent during the state holiday. In Woodfield, it will be 1.25 percent rather than the usual 6.25 percent, Pear said.

Most of the early openings take place on weekends.

Sears stores open at 6 a.m. Friday — four hours earlier than normal — for the tax holiday.

Woodfield Mall lists a variety of stores opening at staggered times, starting at 6 a.m. Friday with Gap, GapKids, Gymboree, Ragstock, The Buckle, Charlotte Russe, Spring, Finish Line, Crocs, followed at 8 a.m. by Macy’s and Lord & Taylor.

Kohl’s stores open at 8 a.m. on Friday and 7 a.m. on Saturday.

In some cases, the largest retailer will be the only store inside a mall to open early, such as JC Penney’s early opening at Ford City Mall.

Local JC Penney stores hold their early hours on both weekends, starting at 9 a.m. to 11 p.m. Friday and on Aug. 13; 7 a.m. to 11 p.m. on Aug. 7 and 14; and 10 a.m. to 9 p.m. on Aug. 8 and 15.

Aug. 3, 2010

By JUDY MASTERSON

With four kids in school, Monica Jansen welcomes Illinois’ first-ever state sales tax holiday on school supplies and clothing, which runs Friday through Aug. 15.

Jansen, a resident of Gurnee, has already purchased pre-packaged supplies for her youngest three children through their schools, but she’s still shopping for odds and ends — book covers, backpacks — and she plans to outfit her high schooler during the sales tax holiday. While the 5 percent tax savings on the estimated $200 she plans to spend will result in a modest $10 discount, Jansen is mindful of those who have to watch every penny.

“There’s a lot of low-income families who can’t afford new school clothes,” she said. “I hope this helps close the gap.”

When Gov. Pat Quinn signed the new law on July 7, he said the goal was two-fold: to help struggling families purchase what their students need for school and to entice Illinois consumers back into stores.

“A strong, confident consumer demand, that’s what it’s all about,” Quinn said.

Illinois families spend between $800 million and $1.2 billion every year on back-to-school supplies. The state has published two long lists of qualifying and non-qualifying items for school supplies and clothing and accessories under $100.

Under clothing, for instance, shoes, boots, dresses, pants, shirts, skirts and socks are tax-exempt. Ice skates, umbrellas and watches are not. Shoppers can expect to save on the usual classroom necessities — paper, pens, pencils, crayons, rulers, erasers, tape, glue. But they will still have to pay state sales tax on items like computers and related equipment, art supplies and on dictionaries and other reference books.

The waiver does not apply to local and home rule sales taxes.

State Rep. JoAnn Osmond, R-Antioch, who voted against the bill, said the tax holiday will hurt both the state’s economy and retailers.

“I feel very strongly that our state is in a serious financial situation and any type of tax holiday right now does not help our situation,” Osmond said. “We need to focus on getting our bills paid, on bringing jobs to Illinois. It’s nice to do these things, but we can’t afford them.”

Osmond called the holiday “a nightmare for retailers,” arguing it will increase their overhead.

Terry Phillips, owner of TNT’s Dollar Plus, 821 W. Rollins Road, Round Lake Heights, said the new law is “absolutely ridiculous.”

“If they spend $100, they’re going to save $5,” he said, referring to shoppers. “It’s not like people are going to rush out to the store to save $5 on stuff they have to buy anyway.”

Because he carries a smaller inventory of back-to-school items, Phillips plans to deal with the sales tax suspension through point-of-sale, by hitting an “exception” button on his cash register for exempt items.

“I’ll do it manually for every purchase,” he said.

At the big chains, exempt items will be programmed through some corporate magic wand.

“We’ll scan it and that’s that, thank God,” said Roger Agustin, manager of Walgreens, 4830 Grand Ave., Gurnee.

Agustin, who noted already brisk sales for school supplies, said customers inquired about the sales tax holiday last week.

“They’re watching their money, for sure,” he said.”

As Governor Pat Quinn signed the Illinois State Sales Tax Holiday into law on July 7, IRMA President & CEO David F. Vite welcomed the program as a needed economic stimulus for both consumers and retailers.

Illinois’ State Sales Tax Holiday will run from Aug. 6-15. It will suspend the State’s Sales Tax of 5 percent on eligible school supplies, clothing and footwear while leaving the 1.25 percent rate paid to local governments. The tax exemption applies to clothing and footwear with a retail selling price of less than $100. However, computers and computer supplies, PDA’s and cameras are not eligible.

“We’re pleased the Illinois State Legislature and Governor Pat Quinn agreed to provide tax relief to consumers,” Vite told the media before Quinn signed the bill. “Both consumers and businesses have been crying out for relief during this difficult economic downturn. The road to recovery goes through retailing and consumers, and Illinois’ first-ever sales tax holiday will go a long way in aiding these efforts.”

In similar fashion to the Energy Star Appliance Rebate Program earlier in the year, IRMA held a special Webinar to help retailers understand the finer points of the 10-day Sales Tax Holiday.

The Holiday will provide much-needed stimulus to encourage spending, while local governments will benefit with a bump in their revenues. Across the nation, 18 other states have held sales tax holidays, all of which have been successful. Each has generated a positive economic impact to the economy of their states.

According to a study of the Florida Sales Tax Holiday by the Washington Economics Group (WEG), the tax holiday has a positive economic impact, increasing gross sales by about 8 percent for the month in which it is held.

While Florida has run eight school sales tax holidays, the WEG analysis found it missed out when it did not do so in 2008 and 2009. If Florida had held a tax holiday in 2009, WEG said it would have represented an increase in economic activity of about $1.7 billion, boosting Florida’s Gross Domestic Product by close to $1 billion for the year. The tax holiday also would have resulted in a net increase of $118 million in state and local taxes as a result of increased economic activity.

The study suggests that because of the competitive nature of retailing, all savings from a tax holiday end up in the pockets of consumers. The popular program increases store traffic in all retail sectors, and results in an increase in both jobs and overall sales tax revenue, both sorely needed in Illinois.

“Sales tax holidays are something both conservatives and liberals can agree on,” Vite said. “Conservatives like lower taxes and less government while liberals like to give tax relief to those who need it most. Sales tax holidays do both.”

State officials outline tax holiday rules

Effective August 6, 2010, through August 15, 2010, a state sales tax holiday will be implemented and certain items purchased during this time period will have a reduced sales tax rate. The sales tax rate you will be required to collect during the holiday period is the rate currently in effect on the date of the holiday minus 5 percent. The Illinois Department of Revenue’s list of qualified items is constantly evolving. For updates, visit the DOR’s website at tax.illinois.gov.

Clothing

Retail selling price must be less than $100, including

• household and shop aprons

• athletic supporters

• bathing suits and caps

• belts and suspenders

• coats and jackets

• gloves and mittens

• hats, caps, and ear muffs

• lab coats

• neckties

• rainwear

• rubber pants

• scarves

• underwear

• school uniforms

• shorts and pants

• skirts and dresses

• hosiery and pantyhose

• shirts and blouses

Footwear

Retail selling price must be less than $100, including:

• shoes, sneakers, and shoe laces

• sandals

• slippers

• socks and stockings

• footlets

• boots and overshoes

• insoles for shoes

• steel-toed shoes

School supplies

Must be used by students in the course of study, including:

• binders

• book bags

• calculators

• cellophane tape

• blackboard chalk

• compasses

• composition books

• crayons

• erasers

• expandable pocket, plastic, and manila folders

• glue, paste, and paste sticks

• highlighters

• index cards and index card boxes

• legal pads

• lunch boxes

• markers

• notebook paper, including loose leaf notebook, copy, graph, tracing, manila, colored and construction paper, and poster board

• pencils and pencil leads

• pens, ink, and ink refills for pens

• pencil boxes and other school supply boxes

• pencil sharpeners

• protractors and rulers

• scissors

• writing tablets

Rules for Special Sales

Coupons and discounts

To determine whether the eligible clothing item’s retail selling price is below $100, look at the price after the unreimbursed coupon or store markdown but before a reimbursed coupon.

Bundled sales

Qualifying items bundled with items that do not qualify for the state sales tax holiday rate will be subject to the reduced tax rate only if the value of the qualifying items exceed the value of the non-qualifying items.

Splitting items

Articles normally sold as a single unit must continue to be sold as such to determine whether the selling price is within the state sales tax holiday price threshold. For example, a pair of shoes with a selling price of $125.00 cannot be sold separately so the sales price of each shoe is within the sales tax holiday price threshold.

Rain checks

Qualifying items purchased during the holiday with a rain check issued prior to the state sales tax holiday will qualify for the reduced sales tax rate. Qualifying items purchased after the state sales tax holiday with rain checks issued during the holiday are not eligible for the reduced tax rate.

Exchanges

If a customer purchases a qualifying item during the state sales tax holiday, but after the holiday exchanges it for a different size, color, or other feature at the same or lower price, no additional tax will be due.

If a customer purchases a qualifying item during the state sales tax holiday, but after the holiday returns the item and receives credit on the purchase of a different item, they will receive credit for the holiday tax paid. The customer is charged the full sales tax rate on the purchase of a new item.

If a customer purchases a qualifying item before the state sales tax holiday period, but returns it during the sales tax holiday period and receives credit on the purchase of a different item that is eligible, the reduced rate of sales tax is due if the replacement item is purchased during the holiday.

Delivery charges

Delivery charges are part of the selling price of an item of clothing for purposes of calculating the $100 threshold unless the seller and buyer have a separate agreement for delivery. Follow these steps.

Step 1: Determine if there is a separate agreement for delivery. A separate agreement is established • when the seller and the buyer have a separate contract for delivery charges and those charges do not exceed the cost of delivery (they are taxable to the extent they exceed the actual cost of delivery); or

• the seller can document that the buyer has the option of taking delivery at the seller’s location for the agreed purchase price or having delivery made for the agreed purchase price plus an ascertainable delivery charge (they are taxable to the extent that they exceed the actual cost of delivery). Example: An on-line or catalog seller offers buyers the option of picking up the item at a local store. If a separate agreement exists, delivery charges are not part of the item’s selling price. Do not add delivery charges to the item’s selling price for purposes of calculating the $100 threshold. Do not go to Step 2.

• If a separate agreement does not exist, the delivery charge should be apportioned to each item. Go to Step 2.

Step 2: Calculate what percentage of the total order (not including delivery) is attributable to each item. Apply that percentage to the total delivery charge to apportion the delivery charge to each item. Next, add the apportioned delivery charge to each item to determine if the $100 threshold is met.

Example: Two jackets purchased (one for $95 and one for $60) as part of one transaction with a $10 delivery charge — $95 Jacket ($95 is 61% of $155 subtotal). 61% of $10 delivery charge = $6.10; total price for purposes of calculating threshold is $101.10, (ineligible for the state sales tax holiday rate). $60 Jacket ($60 is 39% of $155 subtotal). 39% of $10 delivery charge = $3.90; total price for purposes of calculating threshold is $63.90, (eligible for the state sales tax holiday rate) $155 Subtotal; $10 Delivery; $165 Total.

Back orders

Qualifying items will be eligible for the reduced sales tax rate if:

• the item is delivered and paid for by the customer during the state sales tax holiday period, or

• the customer orders and pays for the item and you, the retailer, accept the order during the sales tax holiday for immediate delivery even if it is delivered after the state sales tax holiday period.

Returns

Retailers may establish their own policy for a time period to accept returns for credit or refund. However, if a customer does not provide a receipt, invoice, or other proper documentation that shows a tax rate different than the state sales tax holiday rate, the refund or credit given for any and all returns within the 60-day period immediately following the state sales tax holiday period shall be refunded or credited at the reduced tax rate. In order to receive credit for tax refunded to your customer, you will need to file Form ST-1-X, Amended Sales and Use Tax Return. If you have more than one site, you will need to complete Form ST-2-X, Amended Multiple Site Form.

Business account purchases

The reduced rate of tax applies only to school supplies used by a student in the course of study; therefore, items that may be classified as school supplies purchased under a business account are subject to the full rate of tax. Sales made under one of the following circumstances are considered business purchases:

• the purchaser is billed under a business account maintained at the retailer;

• items are purchased using a business membership at a retailer that is membership based;

• items are purchased using a business check (rather than a personal check);

• items are purchased using a credit card issued to a business by the retailer (rather than a credit card issued by a third party); or

• items are delivered to the business.

U.S. families to spend more

American families are expected to spend more on back-to-school supplies and clothing than either of the last two years, according to the National Retail Federation.

The NRF’s 2010 Consumer Intentions and Actions Back to School Survey, conducted by BIGresearch, found the average family will spend $606.40, compared to $548.72 last year and $594.24 in 2008.

The survey found that 44.3 percent will buy more store brand or generic products and a growing number of parents (30.3 percent) will compare shop online. Apparel will take up the majority of consumer budgets and 71.2 percent said they will shop at a discount store, with 53.9 percent expected to visit a department store.

Retailers win in Washington

Retailers won a victory in Washington, D.C. when the U.S. Senate passed a financial services reform bill requiring reasonable debit and credit card fees. The U.S. House passed the bill on June 30 and it now awaits President Obama’s signature.

The bill includes an amendment sponsored by Senate Majority Whip Richard Durbin (D-IL) requiring the Federal Reserve to set regulations resulting in “reasonable and proportional” swipe fees for debit cards.

The amendment would also bar the card industry from interfering with merchants who offer a discount or other benefit to customers who pay by cash, check or debit rather than credit cards. Merchants would be able to set minimum purchase amounts of up to $10 for credit cards.

Jobless rate drops again

The Illinois seasonally adjusted unemployment rate dropped 0.4 points to 10.4 percent in June, according to the Illinois Department of Employment Security.

The manufacturing sector (1,600 jobs) and the construction sector (3,400 jobs) led the private sector’s gain of 9,000 new jobs in June and offset the expected loss of temporary Census 2010 positions.

Illinois payroll employment is up in 2010 by 59,600 jobs – the majority of that growth in the private sector.

FDA website outlines new retail tobacco regulations

The Food and Drug Administration has launched a new campaign to educate retailers and raise awareness about new tobacco product regulations designed to protect kids from the dangers of tobacco use.

The new FDA regulations became effective on June 22. A new website, www.fda.gov/BreakTheChain, was launched to educate retailers about the regulations.

The website includes detailed guidance on the new regulations, directions on how to syndicate FDA Center for Tobacco Products content on company websites and directions on how to sign up for FDA e-mail updates.

JULY 2010 – Issue 3

In This Issue

CONTRIBUTOR PROFILE: ATTORNEY ROBERT T. SHANNON
GUARDING AGAINST A HOSTILE WORK ENVIRONMENT
THE CHICAGO HEAD TAX
CITY COUNCIL ACTIVITY

Contributor Profile: Attorney Robert T. Shannon Each edition of the 121 Report will feature an article from Chicago attorney, Robert T. Shannon highlighting current legal issues of interest to the retail community. Bob is a member of CRMA and has been involved in retail-related issues for many years. He has worked as a prosecuting attorney for the City of Chicago and currently represents retailers large and small that have claims against the city. Bob’s diversity of experience and high level of skill and respect in the legal community make him a welcome addition to CRMA. We hope that you find his articles as intriguing as they are informative. Please find his formal biography below:
Robert Shannon is a partner with the full service law firm of Hinshaw & Culbertson LLP, where he serves on the firm’s Executive Committee. Hinshaw has eight (8) offices located in Illinois that allow it to service clients throughout the entire state. Shannon specializes in the representation of retail business in litigation and regulatory matters. Specifically, he defends businesses in employment, code enforcement, premises liability, contractual and licensing matters.

Shannon brings unique experience to his retail clients given his background serving as a prosecutor for the City of Chicago’s Municipal and Special Prosecutions Divisions. Before joining Hinshaw in 1999, Shannon handled prosecutions for several City of Chicago Departments including Health, Environment, Consumer Services and Revenue. He also served as a prosecutor before the Mayor’s License Commission.

Shannon recently served as Co-Chair of the City of Chicago’s Retail Advisory Committee, where he represented the interests of the retail industry. He is a member of the Advisory Board for the Illinois Restaurant Association and serves on that organization’s Government Relations Committee. He has been recognized as a Leading Lawyer in the areas of Municipal and Commercial Litigation.

Shannon may be reached at 312-704-3901 or by emailing him at
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*LEGAL HOT TOPIC*

GUARDING AGAINST A HOSTILE WORK ENVIRONMENT

As some retailers know all too well, employment lawsuits and EEOC complaints can be extremely frustrating, costly and time consuming. “Hostile work environment” claims are particularly onerous, can disrupt day-to-day business operations and create public relations problems. However, a retailer may significantly insulate itself from legal exposure if it has a formal policy in place to investigate and remedy complaints of harassment.

Typically, a successful hostile work environment claim is “composed of a series of separate acts that collectively constitute one ‘unlawful employment practice.’” However, such an environment exists only where harassing conduct is “sufficiently severe or pervasive to alter the conditions of the worker’s employment and create an abusive working environment.” Although there is no mathematically precise test to define conduct that creates a hostile work environment, the courts do provide some guidance. Specifically, the inquiry becomes whether a “reasonable person” would find the atmosphere abusive with particular attention on: 1) the frequency of the challenged conduct; 2) its severity; 3) whether it is physically threatening or humiliating or whether it is a mere “offensive utterance;” and 4) whether it interferes with an employee’s performance.

Courts have held that the more severe the conduct, the less pervasive or frequent the conduct need be to satisfy the threshold question of whether it alters a condition of employment. By the same token, the more frequently the conduct occurs, the less severe the conduct needs to be for courts to find that it sufficiently alters a condition of employment. The United States Supreme Court has held that “teasing, offhand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment.” 524 U.S. 775 (1998). However, an “unambiguously racial epithet” is considered “unquestionably serious and offensive.” 121 Fed.Appx. 148 (7th Cir. 2005).

Hostile work environment claims often arise in sexual harassment cases, and in such cases physical assaults are not always necessary. Courts have found that a “sustained campaign of taunts, directed at [an employee] and designed to humiliate and anger him, [are] sufficiently severe and pervasive to alter the terms and conditions of his employment.” 256 F.3d 864 (9th Cir. 2001). Each case must be put in context, however. For instance, a high-end clothing retailer in New York was found not liable for harassment where the store manager continually commented on the employee’s “elegant and sexy appearance.” There, the court determined that the employee’s claims were undercut by the fact that positive comments about appearance would have been normal in the context of a high-end fashion store. 2005 WL 1162450.

Acts of supervisors and co-workers are not the only conduct that can result in retailer liability, rather some courts have imposed liability based on customer conduct. For example, in a case involving a restaurant, a waitress asked her supervisor if someone else could wait on two men who had been into the restaurant before and had made sexually offensive comments to her. 162 F.3d 1062 (10th Cir. 1998). The supervisor initially denied her request, and after being informed that the customers had just grabbed her by the hair, the supervisor again denied the waitress’ request. When she returned to the table with a pitcher of beer, one of the customers pulled her to him by her hair, and sexually assaulted the waitress. The waitress then quit and filed suit. The federal court ultimately held that the supervisor knew of the offensive conduct, and even though the customers were not employees, the supervisor failed to take remedial steps to protect his staff. The case proceeded to trial before a jury, which awarded the waitress $200,000 in compensatory damages and over $37,000.00 in plaintiff’s attorney’s fees.

In another case involving a retailer, a female employee was sexually harassed by a male customer who had entered the locked cooler area where she was stocking items. 2008 WL 183699 (D. Utah). The customer had requested the key for the cooler from another employee, who previously had seen the two chatting and assumed that they were friends. In that case, the retailer was found not liable because it never was informed by the employee of any prior advancements made by the customer.

Where retailers can show that they have taken effective remedial actions to deal with complaints, these measures can be raised as a defense to a hostile work environment claim. To avail itself of this defense, a retailer must show (1) that it exercised reasonable care to prevent and promptly correct harassing behavior, and (2) that the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the retailer or unreasonably failed to otherwise avoid harm. 524 U.S 775. The flip side is that a retailer may be held liable in circumstances where it “fails to remedy or prevent a hostile work environment of which management-level employees knew, or in the exercise of reasonable care should have known.” As one court found, “‘[o]nce an employer knows or should know of [co-worker] harassment, a remedial obligation kicks in,’ [and] [a]n employer is liable for the hostile work environment created by a co-worker unless ‘the employer … take[s] adequate remedial measures in order to avoid liability.’” 256 F.3d 864. A retailer’s policy must be reasonably calculated to end the harassment, and the reasonableness of the policy turns on its ability to stop the harassment and to deter future harassment.

As a result, the best policy is for retailers to take seriously their duty to guard against harassment. Clear procedures should be promulgated and available to employees who feel that they have been subjected to inappropriate conduct at work. Where questionable conduct is discovered, the events underlying that conduct should be investigated and, if appropriate, remedial actions should be taken against supervisors, subordinates and customers alike. The failure to accurately recognize or remedy harassing behavior ultimately can cause a retailer to find itself on the hook for a violation of federal employment statutes.

Robert T. Shannon is a partner in the law firm of Hinshaw & Culbertson LLP, and can be reached at 312.704.3901 or rshannon@hinshawlaw.com.

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THE CHICAGO HEAD TAX – A BRIEF INTRODUCTION

If you operate a business in Chicago with at least 50 full-time employees and/or commission merchants, then you are familiar with the Employer’s Expense Tax, generally referred to as the “Head Tax.” The tax was first adopted in 1974 by Mayor Richard J. Daley, and stands today albeit with a $1.00 per month reduction passed in 1994 by the current Mayor Daley, and some recent modifications.

Each employer that is required to pay the head tax must remit $4.00 per month for full-time employees or commission merchants on staff, that are actually working in the city of Chicago. The city collects the tax quarterly for every month that an employer is eligible, and the employer is prohibited from transferring the tax to employees. The revenue generated from the tax goes to the city’s corporate fund which is its general fund for all major operations of the city.

Since its inception, the head tax has been unpopular with Chicago’s business community. There have been many calls for lowering or eliminating the tax altogether over the years. In April 2009, Alderman Tom Tunney (44) introduced a proposal to gradually eliminate the head tax. Although the idea gained traction among many of the aldermen, it wasn’t until this year, in an effort to address the severe economic downturn and support growing businesses, that the city passed legislation to give certain businesses temporary relief from the head tax for the next two years. If a business was not required in the 2009 or 2010 tax years, and the business grew to over 50 full-time employees making them eligible for the Employer’s Expense Tax, they would be given a reprieve from having to pay the tax for the current tax year.

In addition, for those businesses that paid the head tax in either 2009 or 2010 and the amount owed to the city increased due to the growth of the number of employees, the business would not have to pay the tax owed on the new employees, keeping the tax equal to the prior year’s tax. Similarly, if a business merged or acquired another business causing it to have an increase in the amount of head tax owed to the city, it would also only be required to pay the amount of tax owed in the previous year.

To date, only one other city has attempted to follow Chicago’s lead and implement its own version of a head tax. In July 2007, Seattle, Washington passed the Employee Hours Tax (EHT). Although the incidence of the tax fell to employers, the tax was levied on every employee hour worked regardless of the number of workers employed by the company. A reduction could be claimed for each employee that chose a mode of transportation to and from work which did not include a car/truck/motorcycle at least 80% of the time. The EHT was applied regardless of the number of workers employed by a business. The funds collected from the tax were used for infrastructure improvement. After a few years of collecting the tax, in January of 2010, the city of Seattle repealed the EHT citing difficulties in collecting the tax, the high number of employees eligible for the alternative transportation exemption, and higher than anticipated revenues collected from their commercial parking tax.

Other jurisdictions have either implemented or attempted to pass legislation for head taxes on specific industries or categories of residents. In 2006, Alaska introduced a head tax on cruise ship passengers which was lowered this year from $46.00/person to $34.50/person. The state is currently being sued by the Alaska Cruise Association over the constitutionality of such a tax and is dealing with the loss of cruise ships that have since decided to dock in non-Alaskan ports. On the other side of the country, both the cities of Providence, RI and Pittsburgh, PA attempted to charge a head tax to full-time, private college students in their respective cities in 2009. Both proposals were eventually pulled back in an attempt to pursue other options and, in part, due to fierce public opposition.

In all three cases, there was a very compelling argument by the opposition to the head tax that when cruise ships dock or when students are in school, they spend money and are major contributors to the local and state economy. Although Chicago and Alaska decided not to repeal their respective head taxes, they did agree that reducing them, even on a temporary basis, would encourage the growth of business, industry and of the local economy. In times like these, a little help goes a long way.

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CITY COUNCIL MEETING JUNE 30, 2010

INTRODUCTIONS – ORDINANCES AND RESOLUTIONS

Clarification of Duties of Commissioner of Zoning as Commissioner and Zoning Administrator – Mayor Daley – Zoning Committee

This introduction clarifies that the Commissioner of Zoning and the Zoning Administrator shall be the same person with two distinct responsibilities. The commissioner will enforce the provisions of the Zoning Ordinance as well as administer and review all planned development ordinances. The Commissioner of the Department of Environment will review the environmental impact of all projects waiting for Plan Commission approval. Floor Area Bonuses will now, in some cases, be approved by the Zoning Administrator, the Plan Commission, or through the Planned Development process.

Nuisance Abatement – Ald. Suarez, Ald. Fioretti and others – Joint Housing and Buildings Committees

This introduction raises the fine for failure to abate a nuisance from a minimum of $25.00 to a minimum of $250.00 for each violation. Also raises the weeds abatement penalty from a minimum of $100.00 to a minimum of $500.00 and from a maximum penalty of $300.00 to $1000.00. Lots where weeds have grown over 10 inches can be declared a public nuisance and owners will be fined up to three times the amount of the costs incurred by the city to abate the nuisance. Nuisances which pose an imminent threat to public health, safety or welfare can be abated by the city at any time without notice and can also be abated in the instance of an emergency. Ill-maintained lots that contain refuse, ashes, waste or other debris can become a public nuisance, and fines have been raised from a minimum of $500.00 to $750.00 and a maximum of from $1000.00 to $1500.00. Fines for illegal dumping, accumulation of materials or junk and lot maintenance will be set at a minimum of $250.00 to a maximum of $500.00 for each offense.

PASSED LEGISLATION

Appointments

Robert S. Hoff – Commissioner – Department of Fire

Driveway Permit Fees – Mayor Daley – Transportation Committee

This ordinance sets flat fees for the annual commercial driveway permit fee for driveways greater than 25 feet wide. Currently, the permit fee is $100.00 plus an additional $2.00 for every foot in excess of 25 feet. The ordinance will separate driveways into categories according to their width with a flat fee assessed according to size.

Effective Date: July 27, 2010

Open Excavations – Mayor Daley – Buildings Committee

Excavations or foundations that are open, unsecured, or filled with water causing hazard to the public, can be declared a public nuisance. A penalty is established for nuisance abatement. Upon the finding of such a nuisance the Commissioner of either the Department of Buildings or Streets and Sanitation can order the owner to abate the nuisance by a specified time. The city could also abate the nuisance itself in an emergency situation.

Effective Date: July 27, 2010

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Contact Information:
Tanya Triche
Senior Counsel
312/726-4600
ttriche@irma.org