Sales tax loophole costs Chicago millions of dollars

August 22, 2011 4:55:32 PM PDT
Some companies that conduct business in the Chicago area are exploiting tax loopholes to avoid Chicago's high sales tax rates.

They are listing the point-of-purchase as Channahon or Kankakee to avoid the high sales tax rates in Cook and some surrounding counties. The strategy is costing city and suburban taxing districts tens of millions of dollars.

Chicago Mayor Rahm Emanuel says as soon as he heard about this, he consulted with the city's lawyers.

"There's companies doing work here in the City of Chicago who are literally designing, with high priced lawyers and accountants, a system to circumvent the sales tax. That's not right," Emanuel said.

Emanuel said the city plans to file a lawsuit this week against Channahon and Kankakee to stop the practice.

The Regional Transportation Authority, which relies on sales tax for half its budget, plans to discuss the issue Tuesday.

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