{ "id": 5481954, "name": "THE CITY OF NAPERVILLE, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant;-THE CITY OF BATAVIA, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant", "name_abbreviation": "City of Naperville v. Department of Revenue", "decision_date": "1982-01-22", "docket_number": "Nos. 81-207, 81-222 cons.", "first_page": "312", "last_page": "318", "citations": [ { "type": "official", "cite": "103 Ill. App. 3d 312" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "39 N.E.2d 1006", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "opinion_index": 0 }, { "cite": "379 Ill. 169", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2551539 ], "weight": 2, "pin_cites": [ { "page": "172" }, { "page": "172-73" } ], "opinion_index": 0, "case_paths": [ "/ill/379/0169-01" ] }, { "cite": "377 N.E.2d 202", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "60 Ill. App. 3d 886", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3351737 ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/60/0886-01" ] }, { "cite": "273 N.E.2d 823", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "49 Ill. 2d 260", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2909285 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/ill-2d/49/0260-01" ] }, { "cite": "396 N.E.2d 545", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "92 S. Ct. 1171", "category": "reporters:federal", "reporter": "S. Ct.", "opinion_index": 0 }, { "cite": "31 L. Ed. 2d 231", "category": "reporters:federal", "reporter": "L. Ed. 2d", "opinion_index": 0 }, { "cite": "405 U.S. 954", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 11743493, 11743150, 11743215, 11743283, 11743572, 11743349, 11743095, 11743421, 11743646 ], "opinion_index": 0, "case_paths": [ "/us/405/0954-07", "/us/405/0954-02", "/us/405/0954-03", "/us/405/0954-04", "/us/405/0954-08", "/us/405/0954-05", "/us/405/0954-01", "/us/405/0954-06", "/us/405/0954-09" ] }, { "cite": "449 F.2d 906", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 799101 ], "weight": 2, "year": 1972, "pin_cites": [ { "page": "912" } ], "opinion_index": 0, "case_paths": [ "/f2d/449/0906-01" ] }, { "cite": "381 N.E.2d 222", "category": "reporters:state_regional", "reporter": "N.E.2d", "opinion_index": 0 }, { "cite": "72 Ill. 2d 189", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5443195 ], "opinion_index": 0, "case_paths": [ "/ill-2d/72/0189-01" ] }, { "cite": "364 N.E.2d 597", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "49 Ill. App. 3d 713", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5637314 ], "year": 1978, "pin_cites": [ { "page": "719" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/49/0713-01" ] }, { "cite": "257 U.S. 66", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3678589 ], "weight": 3, "opinion_index": 0, "case_paths": [ "/us/257/0066-01" ] }, { "cite": "126 N.E. 739", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1921, "opinion_index": 0 }, { "cite": "292 Ill. 236", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 4979289 ], "year": 1921, "pin_cites": [ { "page": "250-51" } ], "opinion_index": 0, "case_paths": [ "/ill/292/0236-01" ] }, { "cite": "8 Ill. 2d 590", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 2714973 ], "pin_cites": [ { "page": "598" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/8/0590-01" ] }, { "cite": "359 Ill. 152", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5277370 ], "opinion_index": 0, "case_paths": [ "/ill/359/0152-01" ] }, { "cite": "77 Ill. 2d 346", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5490858 ], "weight": 7, "pin_cites": [ { "page": "351" }, { "page": "351" }, { "page": "359" }, { "page": "359" }, { "page": "358" }, { "page": "358" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/77/0346-01" ] }, { "cite": "396 N.E.2d 544", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 7, "year": 1979, "opinion_index": 0 } ], "analysis": { "cardinality": 705, "char_count": 16814, "ocr_confidence": 0.845, "pagerank": { "raw": 9.31052265537145e-08, "percentile": 0.5129125288771662 }, "sha256": "44126defd6145f6de7ca4367557d264bff41234509d4a3c5dc103174b13bc2a6", "simhash": "1:bff66e567a956422", "word_count": 2836 }, "last_updated": "2023-07-14T15:16:39.830915+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "THE CITY OF NAPERVILLE, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant.\u2014THE CITY OF BATAVIA, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant." ], "opinions": [ { "text": "JUSTICE REINHARD\ndelivered the opinion of the court:\nThese actions, consolidated on appeal, were brought in the circuit courts of Du Page and Kane counties under the Administrative Review Act (Ill. Rev. Stat. 1979, ch. 110, par. 264 et seq.) to review final assessments made by the Department of Revenue against the cities of Naperville and Batavia for State public utilities tax liability (Ill. Rev. Stat. 1979, ch. 120, par. 468 et seq.). On February 19, 1981, the circuit court of Du Page County entered an order in the case of City of Naperville v. Illinois Department of Revenue, which in pertinent part found:\n\u201c2. \u2018Gross receipts\u2019 which are subject to a 5$ tax under the provisions of the Public Utilities Revenue Act, Ch. 120, Ill. Rev. Stat. \u00a7468 et seq. (1977) does not include the municipal tax that is billed separately to each user of an electric utility and reflected in the general fund of the plaintiff, City of Naperville, rather than its electric utility fund. This determination is directly analogous to that made by the Illinois Supreme Court in Getto v. City of Chicago, 77 Ill. 2nd 346, 396 N.E.2d 544 (1979).\u201d\nAn identical order, excepting the name of the city, was entered on the same day by the circuit court of Kane County in City of Batavia v. Illinois Department of Revenue. It is.this portion of the orders from which the cities appeal.\nThe Department of Revenue contends on appeal that the circuit courts erred in holding that the term \u201cgross receipts\u201d contained in the Public Utilities Revenue Act does not include the receipt of the municipal public utilities tax collected by the cities from its resident consumers of electricity. It was established at both of the separate administrative hearings before the Department of Revenue that the cities record the receipt of the municipal tax in their general corporate fund and do not include it in their separate electric utility fund. The taxing structure at issue in this case can be summarized as follows.\nThe cities of Naperville and Batavia each operate an electric utility whereby each purchases power at wholesale and distributes and resells it to its residents. As such, these municipalities are subject to a 53> \u201cgross receipts\u201d tax imposed by the State under the authority of section 2 of the Public Utilities Revenue Act (Ill. Rev. Stat. 1979, ch. 120, par. 469). Also, under the terms of the Illinois Municipal Code, corporate authorities of any municipality are authorized to tax persons \u201cengaged in the business of distributing, supplying, furnishing, or selling electricity for use or consumption within the corporate limits of the municipality, and not for resale, at a rate not to exceed 5% of the gross receipts therefrom.\u201d (Ill. Rev. Stat. 1979, ch. 24, par. 8\u201411\u20142.) Since the citites themselves are the persons distributing, supplying, and selling the electricity, they charge their customers (the city residents) this 5$ municipal tax. This procedure is authorized by section 36(a) of the Public Utilities Act (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 36(a)).\nThe 5^ State tax imposed on Naperville and Batavia pursuant to the Public Utilities Revenue Act is to be based on the \u201cgross receipts\u201d of these cities from the sale and distribution of electricity. Section 1 of the Public Utilities Revenue Act defines \u201cgross receipts\u201d as follows:\n\u201c \u2018Gross receipts\u2019 means the consideration received for electricity distributed, supplied, furnished or sold to persons for use or consumption and not for resale and for all services rendered in connection therewith, including amounts received from minimum service charges, and includes cash, services and property of every kind or nature, and shall be determined without any deduction on account of the cost of the service, product or commodity supplied, the cost of materials used, labor or service costs, or any other expense whatsoever.\u201d Ill. Rev. Stat. 1979, ch. 120, par. 468.\nThe Department\u2019s sole contention is that the term \u201cgross receipts\u201d as defined by the Public Utilities Revenue Act should include the 5% tax which the cities charge their resident consumers of electricity pursuant to section 8\u201411\u20142 of the Illinois Municipal Code and section 36(a) of the Public Utilities Act.\nThe trial court determined, and the cities assert on appeal, that the Illinois Supreme Court decision in Getto v. City of Chicago (1979), 77 Ill. 2d 346, 396 N.E.2d 544, is controlling as applied to the facts in the case at bar. In Getto, plaintiff, individually and as the representative for a class of similarly situated telephone subscribers, brought suit against the city of Chicago and Illinois Bell Telephone Company alleging collection \u00f3f sums in excess of the amount due under the municipal message tax. The message tax authorized the corporate authorities to impose a tax on persons engaged in the business of transmitting messages by means of electricity at a rate not to exceed 5% of the gross receipts for such business. (Ill. Rev. Stat. 1979, ch. 24, par. 8\u201411\u20142.) The tax was passed on to the telephone customers by Illinois Bell as authorized by the Public Utilities Act. (Ill. Rev. Stat. 1979, ch. 111 2/3, par. 36(a).) The defendants mGetto had construed the term \u201cgross receipts,\u201d upon which the message tax was based,- to include not only customer billings, but also taxes imposed on those billings, including the message tax itself. (77 Ill. 2d 346, 351, 396 N.E.2d 544.) The court used the following example in describing the effect of this taxing procedure:\n\u201c* \u00b0 \u00b0 if a customer\u2019s pretax monthly bill were $10 (ignoring, for the sake of simplicity, the existence of Federal and State taxes), the amount upon which the municipal tax is imposed would not be $10, but $10.50. This results in a municipal tax of 52)2 cents, instead of 50 cents, plus a correspondingly larger amount withheld by Bell for its accounting costs.\u201d (77 Ill. 2d 346, 351, 396 N.E.2d 544.)\nAfter deciding that the plaintiff had standing to bring the action and that he was not required to exhaust his administrative remedies by proceeding before the Illinois Commerce Commission, the court held that the city\u2019s message tax could not properly be included in the tax base upon which the same tax was calculated. In so holding the court stated:\n\u201cThe definition of \u2018gross receipts\u2019 contained in section 1 of the Messages Tax Act provides that, \u2018In case credit is extended, the amount thereof shall be included only as and when payments are received.\u2019 (Ill. Rev. Stat. 1977, ch. 120, par. 467.1.) Although no similar provision is contained in the Chicago ordinance, it is clear that services provided on credit are not includable in \u2018gross receipts\u2019 until payment is actually received. The long-established rule is that the \u2018Taxing laws are to be strictly construed and they are not to be extended beyond the clear import of the language used. If there is any doubt in their application they will be construed most strongly against the government and in favor of the taxpayer. Peoples Gas Light Co. v. Ames, 359 Ill. 152.\u2019 (Oscar L. Paris Co. v. Lyons (1956), 8 Ill. 2d 590, 598.) Although the tax was levied upon Bell, it was passed on to the subscriber, and no liability was incurred on Bell\u2019s part until payment was actually received. It would appear, therefore, that plaintiff, as the one who paid the tax, is entitled to the benefit of the foregoing rule, and its application would proscribe the construction of the statute which would result in an increase, both in the amount of the tax paid the city and the \u2018costs of accounting\u2019 permitted to be charged by the nominal taxpayer. We hold, therefore, that construing the term \u2018gross receipts\u2019 to include the municipal tax is erroneous.\u201d 77 Ill. 2d 346, 359, 396 N.E.2d 544.\nAt first glance, the Getto case might appear to be controlling of the issue in the case at bar. The definition of \u201cgross receipts\u201d contained in section 8\u201411\u20142 of the Illinois Municipal Code, which was at issue in Getto, is identical in all relevant respects with the definition contained in section 1 of the Public Utilities Revenue Act which is at issue in the present case. However, on closer examination, we find the rationale for the result in Getto to be wholly inapplicable to the facts in the present case.\nDue to the taxing structure at issue in Getto, the telephone company could pass on the incidence of the municipal message tax to its subscribers. The effect of this was to impose the burden of the tax directly on the subscribers. However, as the supreme court noted, \u201cno [tax] liability was incurred on Bell\u2019s part until payment was actually received\u201d from its subscribers. (77 Ill. 2d 346, 359, 396 N.E.2d 544.) Illinois Bell, however, adopted a formula for the addition of a percentage to be added to the net pretax billings in order for it to retain the same amount of dollars after the municipal tax was applied as before the tax was applied. Since Illinois Bell had not yet received payment for its service at the time of billing, the tax could only be computed on amounts it anticipated receiving. Thus, the telephone subscriber was becoming liable for the tax prior to the time at which Bell became liable to the city.\nThis situation, however, does not exist in the present case. In this case, the taxpayers (the cities of Naperville and Batavia) are separate entities from the consumers of the electricity, and two distinct taxes are involved. Although a portion of the State tax imposed on the cities may be passed on by the cities to the consumers of electricity (Ill. Rev. Stat. 1979, ch. Ill 2/3, par. 36(b)), the State in the present case is not attempting to impose a higher tax on the cities in anticipation of the cities\u2019 receipt of the passed-on amounts. The amount of the State tax is merely being computed, in part, with reference to the cities\u2019 actual receipt of a wholly separate municipal tax from its resident consumers of electricity. Thus, the problem addressed in Getto of \u201ca tax on the tax itself\u201d (77 Ill. 2d 346, 358, 396 N.E.2d 544) is nonexistent in the present case. Also, unlike the situation in Getto, the \u201cconsideration received\u201d (Ill. Rev. Stat. 1979, ch. 120, par. 468) by the cities, which includes the 5% municipal tax, is not merely anticipated but is, in fact, actually received by the cities at the time liability for the State tax attaches. In Getto, the customer billings from Illinois Bell included an amount which anticipated the city\u2019s future tax on Illinois Bell\u2019s gross receipts.\nThe cities, however, attempt to bring this case under the Getto holding by arguing that since the receipt of the municipal tax is recorded in their general corporate funds and not in their separate general utility funds, the tax is not \u201cactually received\u201d by the public utilities. Although it is clear that the cities are acting in a proprietary rather than governmental capacity when supplying their inhabitants with electricity (Springfield Gas & Electric Co. v. City of Springfield (1920), 292 Ill. 236, 250-51, 126 N.E. 739, aff'd (1921), 257 U.S. 66, 66 L. Ed. 131, 42 S. Ct. 24), we do not believe this justifies the cities\u2019 conclusion that the cities are wholly separate entities from the public utilities. The municipal tax is collected by the cities and the fact that they record these receipts in the general corporate fund we view as nothing more than an accounting procedure which is immaterial to the resolution of the issue in this case. See Illinois Power Co. v. Mahin (1977), 49 Ill. App. 3d 713, 719, 364 N.E.2d 597, aff'd (1978), 72 Ill. 2d 189, 381 N.E.2d 222.\nHaving determined that this case is not directly controlled by the holding in Getto, we turn to a discussion of a case we view as more relevant to the issue presented herein. In Agron v. Illinois Bell Telephone Co. (7th Cir. 1971), 449 F.2d 906, cert. denied (1972), 405 U.S. 954, 31 L. Ed. 2d 231, 92 S. Ct. 1171, the issue before the Federal court of appeals was whether certain occupational taxes imposed on Illinois Bell Telephone Company by the State of Illinois and other Illinois municipalities are properly includable in the base on which the Federal excise tax is computed on \u201camounts paid for * * * communication services.\u201d The telephone company was authorized to collect the Federal tax from its subscribers to later be paid over to the United States. The plaintiff contended that the telephone company improperly computed the Federal tax by including certain State and local taxes in the Federal excise tax base. The court held that these amounts were properly included in the tax base on which the Federal tax was computed because while the additional charges imposed on the telephone subscribers were attributable to the State and local taxes paid by the telephone company, those charges were nevertheless part of the price demanded for telephone service. The court gave the following rationale for its holding:\n\u201cThe Government counters that the additional charge is merely part of the compensation demanded by IBT for furnishing the service of transmitting messages; thus, amounts paid to reimburse IBT for its payment of the state and local messages taxes\u2014just as amounts paid to reimburse IBT for all other taxes and for labor costs and equipment repairs\u2014are paid for telephone service within the meaning of the statute. We agree with the Government. All costs incurred in making a product or service available\u2014including the cost of federal, state and local taxes\u2014are ultimately borne by consumers. That the cost of taxes imposed on manufacturers and retailers is added into the price at which goods are sold, even if such taxes are itemized and specifically identified, simply increases the price the consumer must pay to receive the goods or services.\u201d (449 F.2d 906, 912.)\nWe find this reasoning to be persuasive. The Illinois Supreme Court in Getto found Agron to be inapposite since \u201cthe court did not consider the propriety of assessing a tax on the tax itself * 0 (77 Ill. 2d 346, 358, 396 N.E.2d 545.) In neither Agron nor the case at bar was the tax base being computed by the anticipated receipt of the very same tax as in Getto. In the present case, the State tax imposed pursuant to the Public Utilities Revenue Act is merely computed, in part, with reference to a wholly separate tax. Thus, the language in Getto distinguishing Agron does not apply to the present factual situation. Since we find Getto to be inapplicable and Agron to be persuasive, we hold that the term \u201cgross receipts\u201d as defined by the Public Utilities Revenue Act includes the 5% tax imposed pursuant to section 8\u201411\u20142 of the Illinois Municipal Code and passed on to the cities\u2019 residents in accordance with section 36(a) of the Public Utilities Act. The 5% municipal tax is merely a part of the total price the cities demand for their electric service and, as such, it is properly includable in their \u201cgross receipts.\u201d See Martin Oil Service, Inc. v. Department of Revenue (1971), 49 Ill. 2d 260, 273 N.E.2d 823; Jones v. Department of Revenue (1978), 60 Ill. App. 3d 886, 377 N.E.2d 202.\nFinally, we note that our conclusion is reinforced by the actual definition of \u201cgross receipts\u201d contained in the Public Utilities Revenue Act. Section 1 provides that \u201cgross receipts\u201d \u201cshall be determined without any deduction on account of the cost of service, product or commodity supplied, the cost of materials used, labor or service costs, or any other expense whatsoever.\u201d (Ill. Rev. Stat. 1979, ch. 120, par. 468.) The words \u201cany other expense whatsoever\u201d have been interpreted to be all-embracing in their scope. (Vause & Striegel, Inc. v. McKibbin (1942), 379 Ill. 169, 172, 39 N.E.2d 1006.) Had the legislature intended to permit the exemption of this municipal tax it surely would have so provided. (379 Ill. 169, 172-73, 39 N.E.2d 1006.) In contrast, we note that section 1 of the Public Utilities Revenue Act (Ill. Rev. Stat. 1979, ch. 120, par. 468) expressly allows the public utility to exclude the State tax which is added to customers\u2019 bills in determining the public utility\u2019s gross receipts upon which the amount of tax owed to the State will be based.\nAccordingly, for the previously stated reasons, the judgments of the circuit courts of Du Page and Kane counties are reversed.\nReversed.\nLINDBERG and NASH, JJ., concur.", "type": "majority", "author": "JUSTICE REINHARD" } ], "attorneys": [ "Tyrone C. Fahner, Attorney General, of Chicago (Imelda R. Terrazino, Assistant Attorney General, of counsel), for appellant.", "Katherine S. Janega and Marvin J. Glink, both of Ancel, Glink, Diamond, Murphy & Cope, P. C., of Chicago, for appellees." ], "corrections": "", "head_matter": "THE CITY OF NAPERVILLE, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant.\u2014THE CITY OF BATAVIA, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant.\nSecond District\nNos. 81-207, 81-222 cons.\nOpinion filed January 22, 1982.\nTyrone C. Fahner, Attorney General, of Chicago (Imelda R. Terrazino, Assistant Attorney General, of counsel), for appellant.\nKatherine S. Janega and Marvin J. Glink, both of Ancel, Glink, Diamond, Murphy & Cope, P. C., of Chicago, for appellees." }, "file_name": "0312-01", "first_page_order": 334, "last_page_order": 340 }