PRESS RELEASE

IRMA SOCIAL MEDIA

FOR IMMEDIATE RELEASE:  September 9, 2015

CONTACT: 

Catie Sheehan, 217-220-1717; catie@macstrategiesgroup.com

PRESS RELEASE

 

Illinois Retailers Testify About Unfair Statute That Could Cost Them Their Business

SPRINGFIELD—Members of the Illinois Retail Merchants Association (IRMA) testified before the Illinois Senate Revenue Committee about issues retailers unfairly face with qui tam lawsuits in this state, specifically related to application of sales taxes on shipping and handling charges at the point-of-sale.

Qui tam lawsuits are civil suits filed against a person or company who is believed to have committed fraud against the government. Qui tam lawsuits are filed by whistleblowers under the False Claims Act, which gives whistleblowers a reward or a percentage of what’s recovered if the qui tam lawsuit he/she files recovers money for the government. The False Claims Act was not intended to apply to tax transactions. In fact, it was borrowed from the federal government and income tax is specifically excluded from its provisions. Because the federal government does not have a sales tax, no one thought to exempt sales tax as well.

Both Illinois retailers who testified at the hearing were sued by the same firm, Schad, Diamond & Shedden, P.C. This firm has filed hundreds of qui tam lawsuits in the same fashion.

Bob Jones, president of American Sale based in Tinley Park, also testified at the committee hearing because his company was involved in a qui tam case. “The so called ‘whistleblower’ in my case was an attorney who through his knowledge of a poorly written law set out to essentially extort retailers for a very minor twist in how the law was written,” says Jones.  “As a business owner and not an attorney, I am sure there are hundreds of possibilities where an unscrupulous attorney can take these twists or confusingly written laws and use them to make millions of dollars.  I think the spirit of the law was to provide incentives for people who had knowledge of some intentional illegal act in a business but were afraid to say anything. It was not intended to punish employers for following the interpretations and regulations established by the state of Illinois. And it certainly was not intended not to empower opportunistic law firms seeking to find a sweet spot of financial leverage through intimidation.”

Illinois retailers are following the law as applied and interpreted by the Illinois Department of Revenue (IDOR). These lawsuits attempt to coerce money from law-abiding retailers who must choose to either settle or spend months and years defending themselves against this spurious practice. For example, Jeff Pape, president of WrestlingGear.Com, Ltd. based in Elmhurst, ended up settling for $25,000 rather than spending tens of thousands more than that to defend himself against this lawsuit. “I’m a small businessman as are many of the people targeted by this law firm,” says Pape. “We have to choose between running our businesses, staying open, keeping our employees paid, generating sales tax revenue for the state and local units of government, or defending ourselves against these lawsuits and likely losing our businesses– all this as a ‘reward’ for following state regulations and interpretations. No employer should be at risk for following state regulations and interpretations.”

IRMA President and CEO Rob Karr says interpretation of state tax law and regulations issued by IDOR should be the exclusive purview of IDOR. “We hope Illinois lawmakers will consider the unfairness of the current statute and be inspired by the testimony today to change the laws so that people will stop taking advantage this situation. Illinois employers face enough challenges. This should be an easy fix,” says Karr. “This current law hurts retailers to the point that it could easily put them out of business.”

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121 Report – CRMA – August 2015

A BUDGET STALEMATE BRINGS TAXES
…AND MORE TAXES

As the state continues to operate without a budget, Illinois residents and business owners are starting to feel the very real effects of the stalemate.

 

Every week, it seems as if some important constituency will have their funding cut or that bills will not be paid.  Whether it’s federal pass-through funding to help the poor and elderly maintain access to groceries and prepared meals, employee salaries or child care subsidies for low-income families, everything has been in jeopardy at some point.  And while the General Assembly has been in session every week since May 31st (the date by which session was originally scheduled to end) very few bills have passed, including the City of Chicago’s and Cook County’s pension reform bills.

 The financial position of both local jurisdictions has had, and will continue to have, consequences for taxpayers.  While the pension reform bills will help ease some of their burden, both units of government have deficits that exceed the reach of their legislative initiatives.  Cook County Board President Toni Preckwinkle used the legislature’s inaction on her pension bill as an opportunity to pass a sales tax increase. This increase will give the city of Chicago the highest sales tax in the country starting January 1, 2016.  After the tax increase was pushed through within two weeks of the measure being introduced, It was later revealed that President Preckwinkle plans to use over $100 million of that cash infusion to raise the salaries of county employees by as much as 6% in some cases.  This bombshell has left the local and national businesses near the border of the county feeling increasingly unwelcome.  Further salting the wound, it is questionable that the additional revenue could be used for pensions at all.  There is a school of thought that the General Assembly would have to approve the additional revenue for the pension payment which President Preckwinkle’s office has not totally denied.  It is very possible that all of the revenue could be used for purposes other than making pension payments.  This is why the Cook County Board could have, and should have, waited before taking the vote.  There are more questions than answers right now and the uncertainty will have a negative impact business and sales tax revenue.

 

While the retail and restaurant community prepares for that tax to go into effect, we are not out of the weeds yet.  Mayor Rahm Emanuel’s budget address is set to be delivered in mid-September.  If you believe the media reports, that address is likely to include a property tax increase.  A recent lower court decision rejected the city’s attempt to decrease a current pension benefit in exchange for lower-cost, city-funded employee retirement plans.  The city will appeal this decision, but considering that the Illinois Supreme Court just overturned the state’s similar pension reform bill, there is not much hope that the city will prevail.  Add to that current proposed budget from the Chicago Public Schools that cuts spending by $200 million, relies on over $400 million in state aid (that may never come) and lays off over 400 teachers.  If the school system fails to receive the money it is budgeting for from the state, its new chief, Forrest Claypool,  has not yet said what he would do to balance the budget (cue the higher property taxes).

 

While so much discussion regarding the possibility of higher property taxes centers on Chicago’s homeowners, we should note that the business community pays a larger and disproportionate share of property taxes.  It’s probably no surprise to members that the Cook County property tax system is structured differently from every other county in the state.  Rates are assessed at 10% of market value for residential and 25% for commercial.  Therefore, commercial properties carry more of the property tax burden.   Instead of addressing this system that no doubt has a negative impact on commercial development in the county, the discussion always seems to turn to increasing taxes.

 

 There’s no time like the present budget disaster at the state, county and city levels to change the way we think about who we tax, how we tax and why. Cook County would do well to reevaluate its property tax system that keeps residential rates artificially low and commercial rates higher than surrounding counties.  If we want to help the local economy, increased development and job growth is the way to go.  We should change the conversation from increasing property taxes to building the tax base.  There are many ways to stimulate the economy, get people working and grow revenue to local units of government.  Our broken property tax system should be fixed before taxpayers are again asked for more money.

 

CITY COUNCIL ORDINANCES AND RESOLUTIONS

INTRODUCTIONS

Sponsor:  Alderman Proco Joe Moreno (1st Ward)
Committee on Health and Environmental Protection
This proposal would amend the recently enacted plastic t-shirt bag ban by prohibiting retailers from offering compostable bags to customers.  The city of Chicago does not have any commercial composing facilities, and since these bags cannot be recycled, they would all end up in the landfill.  It is not clear how many retailers are actually offering such bags since the cost of doing so is often prohibitive.
 

 

CRMA will continue to push for the ordinance to be amended to replace a ban with a fee on all single-use bags.  The latter option preserves customer choice while employing a proven method for actually changing consumer behavior.  If a customer doesn’t want to pay for bags, then the customer will start bringing their own bags.  The use of plastic bags has decreased dramatically with this model and customers in Washington DC and other cities along the west coast that have gone to a bag fee model have developed the habit of bringing their own bags.
 
Sponsor:  Alderman George Cardenas (12th Ward)
Committee on Health and Environmental Protection
For the past several years legislation has been proposed in the General Assembly to tax sugar-sweetened beverages.  The initiative, led by members of the medical and various health-related non-profit communities, was an attempt to address obesity in communities of color and the chronic illnesses that are tied to it.  The HEAL Act, as it’s known in Springfield, has received hearings in both the House and Senate but has failed to garner enough votes for passage.  We have seen this trend before.  When the advocates fail to get their bill passed in the state legislature, they bring their fight to the city.  But sometimes a bad bill is just a bad bill no matter where it travels.  This fight should stay in the state legislature where it belongs.

 
Interestingly enough, the city of Chicago is the only city in the state that has had an additional tax on soft drinks for over 20 years.  This 3% tax is paid by the consumer to the retailer who then remits the tax to the city.  Yet, the tax has not helped shrink waistlines nor has it reduced the incidence of chronic illness among children or adults in black and Latino communities.  Maintaining a healthy weight is much more complicated than taxing individual products.  It requires a commitment to changing a person’s lifestyle:  what a person eats, drinks, how often they eat, portion size and regular physical activity all play an active role in keeping a person’s weight under control.

 

There is no silver bullet to weight loss.  This tax would just shift sales of the product across the border.  Meanwhile, like the current soft drink tax, it won’t make a dent in tackling obesity and it will hurt grocers near the border of the city.  Members should note that Ald. Cardenas was also the author of Chicago’s current bottled water tax and co-sponsor of the plastic t-shirt bag ban.

 

Sponsors:  Aldermen Tom Tunney (44th Ward) and Michele Smith (43rd Ward)
Committee on License and Consumer Protection
This proposal would establish a pilot program to extend sidewalk cafes into a protected area of the street.  Sidewalk cafes are an important additional revenue source for Chicago restaurants. In some of the most congested areas of the city, it is difficult to establish a sufficient area for outside eating due to narrow sidewalks.  Therefore, Aldermen Tunney and Smith are seeking to have a pilot program for the 2016 sidewalk café season where restaurants could extend the outside seating without unduly interfering with pedestrian or vehicular traffic and parking.

 

The idea would be a great addition to neighborhood retail and hospitality centers by allowing restaurants to expand their square footage and giving residents an opportunity to spend more time outside in the short Chicago summers.  It also will give restaurant employees more opportunities to earn more money due to the additional patrons.  The pilot program is a win for employers, their employees and commercial corridors.  We support it.

 

Sponsors:  Mayor Rahm Emanuel, Aldermen Daniel Solis (25th Ward), James Cappleman (46th Ward) and others
Committee on Zoning, Landmarks and Building Standards
As the city’s transportation authority has spent millions of dollars in recent years modernizing many of the “el” stations, it has become important to turn these areas into bustling retail and residential meccas.  To that end, Mayor Emanuel introduced this proposal to loosen some of the parking requirements and increase incentives for providing affordable units and mixed-use development near these transportation hubs.

TanyaTricheContact Information

Tanya Triche
Vice President & General Counsel

312/726-4600

IRMA 58th Annual Meeting

IRMA invite 3 5x8 5_Page_2

Thursday, October 1, 2015

Empire Room, Palmer House Hilton

17 East Monroe Street

Chicago, IL  60603

11:30 a.m. Reception/ Noon Luncheon

 

 

Mail reservations with checks payable to:
Illinois Retail Merchants Association, 19 S. LaSalle, Suite 300, Chicago, IL  60603 or fax to 312-726-9570

Name:  __________________________________________________________

Company:  ________________________________________________________

Address     _______________________ City__________________  State  _____  Zip code_____

Phone No.: __________     Fax:  __________           Email:  _______________________

Number of persons:   _______ $85.00 pp  _____ $1,250 Sponsor (table of 10)

Inquiries:  Dale Basowski,  312-726-4600, dbasowski@irma.org

Illinois This Week in Springfield 99-18

FEDERAL MONIES
WORKERS’ COMPENSATION
ANNUAL MEETING

This Week in Springfield, the Senate passed a bill giving the State the authority to release federal funds and also passed their version of workers’ compensation reform.  Additionally, IRMA’s 58th annual meeting is just around the corner!

FEDERAL MONIES

The State and its agencies administer many programs that are funded primarily by federal dollars.  With the budget impasse continuing there has been no authority for the State to pass federal funds to local providers. As a result, the Senate introduced and passed Amendment 1 to SB 2042 that gives the State the authority to pass through nearly $5 billion of earmarked federal funds to the appropriate State agencies and programs.

Agencies receiving the funds include but are not limited to Department of Commerce and Economic Opportunity (DCEO), Department of Human Services (DHS), Department of Veteran’s Affairs (DVA), Department of Public Health (DPH), Department on Aging (DOA), and the Illinois State Board of Education (ISBE). If passed by the House and signed by the Governor, programs that will receive their federal monies include but are not limited to the federal portion of LIHEAP, mental health services, alcohol and abuse treatment, developmental disabilities services, job training under the Workforce Innovation and Opportunity Act, cancer screening, prenatal services, etc.

Of particular importance to retailers is the continued funding of the Women Infants and Children Nutrition Program (WIC) and Supplemental Nutrition Assistance Program (SNAP).  Many Illinois residents rely on these programs to assist them in procuring healthy foods for themselves and infants and these residents rely on their local food retailers who are key to the successful implementation and administration of these federally funded programs.  With the passage of this appropriation bill, these programs should not see an interruption of services.

The Governor has signaled that he supports the appropriation bill and intends to sign it if approved in the House. The House Democrats do not oppose the bill, but believe there are additional federal funds that need to be added to the legislation.

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WORKERS’ COMPENSATION

The Senate introduced and passed their version of workers’ compensation reform in Amendment 1 to SB 162. The legislation includes provisions relating to causation, traveling employees, establishing an Ombudsman Program, and modernizing and streamlining the workers’ compensation system.

SB 162 changes the definition of “in the course of employment” and “arising out employment” but does nothing to change the no-fault standard that requires an employer to pay 100% of an injury regardless of how little of the injury actually occurred due to an employment related action.  Additionally, while the legislation attempts to prohibit a claim when a traveling employee is injured outside the duty of their employment, it still allows a workers’ compensation claim for personal deviations.

SB 162 also creates an Ombudsman Program whose objective is to educate employees and employers of their duties and obligations under the Workers’ Compensation Act (“Act”) and to help all stakeholders (e.g. workers, employers, attorneys, medical personnel, etc.) navigate the system. Additionally, it creates a Commission whose purpose is to recodify the Act.

The legislation passed out of committee and the full Senate on a partisan roll-call over the objections of employer representatives including IRMA, Illinois Manufacturers’ Association (IMA), National Federation of Independent Business (NFIB) and the Illinois Chamber of Commerce because the provisions in the amendment are not enough to make meaningful changes to one of the most expensive workers’ compensation systems in the United States.

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ANNUAL MEETING

IRMA’s 58th annual meeting is scheduled for Thursday, October 1, 2015. We look forward to celebrating IRMA and Illinois retailing with all participants and guests. The event starts at 11:30 a.m. and will be held in the Empire Room of the Palmer House Hilton in Chicago. Sponsorship and registration information can be obtained by contacting IRMA at 312-726-4600 or dbasowski@irma.org .

robtanyaalec

Opinion: No need to rush on county sales tax hike

Chicago Sun Times
Written By Rob Karr and Theresa Mintle Posted: 07/08/2015, 01:34pm
Cook County Board President Toni Preckwinkle | Richard A. Chapman/Sun-Times

Cook County once again will have the highest sales tax in the nation if a proposal by Cook County Board President Toni Preckwinkle is approved by the County Board.

The proposal is a 1 percent increase in the sales tax, which would mean Cook County consumers would pay a nation-leading sales tax of between 10.25 percent and 11.25 percent. The highest rate, 11.25 percent, would be paid by consumers in the Metropolitan Pier and Exposition Authority area, comprising most of the City of Chicago’s core.

OPINION

President Preckwinkle has stated she would like the Cook County Board to approve this increase by the end of July. This increase is being proposed before the county’s expenses are known and before the budget is fully vetted. The county has until Oct. 1 to notify the Illinois Department of Revenue of a sales tax rate change that would begin on Jan. 1, 2016. If the county wanted a full debate on the issue, and the taxpayers deserve this debate, it should have the conversation as part of the annual budget process.

So, the question is: Why the rush?

Preckwinkle deserves a great deal of credit for keeping the campaign promise she used to win her first term. That promise was to roll back the nation-leading sales tax imposed by her predecessor. We are grateful that she made good on that promise.  But now, we are concerned that her desire to increase the sales tax will push more sales out of Cook County into neighboring counties, where taxes are significantly lower, and online, where taxes can be non-existent.

Clearly, Cook County faces fiscal challenges related to its pension liability. But instead of pushing through a tax increase, we would encourage the County Board to use the upcoming months to:

1) Detail the county’s fiscal year 2016 proposed budget and fully explain their challenges. This also helps everyone figure out if such a drastic increase in the sales tax would even fix the challenges. Cook County’s chief financial officer, Ivan Samstein, has a good presentation that provides valuable and insightful information but needs to be dissected. Everyone would benefit from the enhanced transparency.

2) Give the Illinois General Assembly and Gov. Bruce Rauner every possible opportunity to pass the legislation the county needs to help with its pension obligations. President Preckwinkle stated she would “reconsider” the sales tax increase if Springfield passes the county’s pension reform bill. Why not give them that time by waiting until the last possible moment to reach for new tax monies?

Why ask county commissioners to vote on a tax increase in July when it might not be needed come Oct. 1? Why give Illinois another bad economic development headline unnecessarily?

Every mention of President Toni Preckwinkle has to start with a recognition that she has tried to do a very good job of controlling costs and returning Cook County to stable financial footing. She is to be applauded for desiring to tear up the proverbial credit card by stopping debt deferrals and fund sweeps. Like the City of Chicago and the State of Illinois, decades of pension mismanagement is coming home to roost all at once. Nevertheless, tax increases should be the last option — not the first.

We strongly urge the County Board to approach this rationally by using the time between now and Oct. 1 to fully vet this and other ideas to thoroughly address expenses. Slow down. Be transparent.

Rob Karr is president/CEO of the Illinois Retail Merchants Association.

Theresa Mintle is president/CEO of the Chicagoland Chamber of Commerce.