Chicago car rental tax prompts law suit

February 24, 2009 5:01:12 PM PST
A tax revolt is brewing in the suburbs.A lot of drivers are surprised to find that when they rent a car in the suburbs. They could end up paying a tax to the city of Chicago.

Traci Cannon-Stokes needs to rent a car for a few days and went to this enterprise branch in Oak Park.

But the city of Chicago wants her to fill out an affidavit that asks for information about how much time the car rentee will spend in Chicago.

It's to determine whether the city can impose it's 8-percent transaction tax and the city requires customers of all rental car companies in suburban cook county and the 6 collar counties to fill out the affidavits. If a customer who rents in the suburbs spends a lot of time in the city, he or she will be taxed an extra 8 percent.

"The city shouldn't cash in on what's going on the suburbs," said Cannon-Stokes, Enterprise customer.

And that's how Enterprise Rental Car feels. The company filed a lawsuit in Kane County, where it had 32,000 car rentals last year, challenging the city's efforts to collect the transaction tax.

"Besides setting up the administrative burden, the cost, privacy concerns who is going to sign this, saying yes, I may use this 50 percent or more in the city," said Stanley Kaminski, attorney for Enterprise Car Rental.

To protest, Enterprise is not passing out the affidavits to its customers.

The transaction tax is not new, according to the city and the Department of Revenue issued a statement that says in part: "The affidavit is required only for customers who reside in Chicago or are staying in Chicago while visiting. We do not believe that the information requested on the form in unreasonable, nor do we believe it is an invasion of customer's privacy."

As far as the lawsuit goes, the city is not commenting and Enterprise hopes a judge will declare the transaction tax unconstitutional.