{ "id": 75227, "name": "ALAN ARENSON, d/b/a Almar Communications, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant", "name_abbreviation": "Arenson v. Department of Revenue", "decision_date": "1996-04-26", "docket_number": "No. 2\u201495\u20140940", "first_page": "355", "last_page": "361", "citations": [ { "type": "official", "cite": "279 Ill. App. 3d 355" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "73 Ill. 2d 243", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5441129 ], "weight": 2, "year": 1978, "pin_cites": [ { "page": "247-48" }, { "page": "247-48" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/73/0243-01" ] }, { "cite": "158 Ill. 2d 76", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 780263 ], "year": 1994, "pin_cites": [ { "page": "83" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/158/0076-01" ] }, { "cite": "168 Ill. 2d 247", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 307266 ], "year": 1995, "pin_cites": [ { "page": "254" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/168/0247-01" ] }, { "cite": "276 Ill. App. 3d 958", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 927657 ], "weight": 2, "year": 1995, "pin_cites": [ { "page": "962" }, { "page": "962" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/276/0958-01" ] }, { "cite": "166 Ill. 2d 165", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 198916 ], "year": 1995, "pin_cites": [ { "page": "181" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/166/0165-01" ] }, { "cite": "377 Ill. 331", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 2545401 ], "year": 1941, "pin_cites": [ { "page": "335" } ], "opinion_index": 0, "case_paths": [ "/ill/377/0331-01" ] }, { "cite": "129 Ill. 2d 389", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5567477 ], "year": 1989, "pin_cites": [ { "page": "414" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/129/0389-01" ] }, { "cite": "131 Ill. 2d 196", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 5570158 ], "weight": 7, "year": 1989, "pin_cites": [ { "page": "201-02" }, { "page": "201-02" }, { "page": "202" }, { "page": "202" }, { "page": "202" }, { "page": "202" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/131/0196-01" ] }, { "cite": "272 Ill. App. 3d 212", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 251336 ], "weight": 2, "year": 1995, "pin_cites": [ { "page": "215" }, { "page": "215" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/272/0212-01" ] }, { "cite": "277 Ill. App. 3d 16", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 1172377 ], "year": 1996, "pin_cites": [ { "page": "21" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/277/0016-01" ] }, { "cite": "156 Ill. 2d 377", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 777554 ], "year": 1993, "pin_cites": [ { "page": "381" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/156/0377-01" ] } ], "analysis": { "cardinality": 648, "char_count": 14618, "ocr_confidence": 0.77, "pagerank": { "raw": 1.688722687298021e-07, "percentile": 0.6987142879758627 }, "sha256": "475bd27e170f944dfa765553f5f44aae6668794aacd4fa33dc9591f9ce5df6e9", "simhash": "1:db83eda2e986aacd", "word_count": 2383 }, "last_updated": "2023-07-14T19:15:35.504495+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "ALAN ARENSON, d/b/a Almar Communications, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant." ], "opinions": [ { "text": "PRESIDING JUSTICE McLAREN\ndelivered the opinion of the court:\nOn administrative review, the trial court affirmed in part and reversed in part a decision of the administrative hearings division of the defendant, the Department of Revenue of the State of Illinois (the Department), regarding certain taxations on the plaintiff, Alan Arenson, doing business as Almar Communications (Almar). The Department appeals that part of the trial court\u2019s ruling which reversed the decision of its hearings division. The plaintiff has not filed a cross-appeal. We affirm the trial court.\nArenson and his wife, Mary Arenson, have operated Almar, a communications business, since 1972 as sole proprietors. From 1985 through 1991, Almar provided paging services to customers. Generally, Almar purchased wholesale air time and resold it to its customers. If a customer did not own a pager, then Almar would also rent out a pager to the customer, charging the customer for both the air time and the pager.\nAlmar was also involved in the two-way radio business, including providing community \"repeaters\u201d to its customers. A repeater is:\n\"[A] two-way radio device that receives a radio signal from a customer and retransmits the signals out to that same customer again to another user, so that *** two users of a customer can talk to each other using the repeater to enhance the range.\u201d\nFrom approximately 1975 to 1980, Almar had a telecommunications tax license, which the State used to assess a telecommunications tax on repeater services. Almar returned the license to the State after some court cases indicated that the tax on the repeater services was not valid.\nIn 1988, Francis Wong, an employee of the Department, met with the Arensons to conduct an audit. Despite finding an accumulation of air time and rental charges upon which Almar had not paid tax, Wong told the Arensons that he did not think that Almar had any tax liability. Wong also told Mary Arenson not to worry about the interest and penalties because the Arensons could simply protest those amounts and the interest and penalties would be thrown out by the Department.\nThe audit initially covered the period from August 1985 to June 1988. In December 1990, the Department assessed a telecommunications excise tax against Almar for that period. In May 1991, the Department sent Arenson a letter, informing him that the documents attached to that letter superseded documents sent previously. The documents in the May 1991 letter restricted Almar\u2019s telecommunications excise tax liability to the period from August 1988 through February 1991.\nFrom August 1988 through February 1991, Almar billed its customers who rented pagers by listing the charges for both air time and pager rental together on the customer invoices. However, the charges for air time and pager rental were separated in Almar\u2019s records.\nThe telecommunications excise tax liability for the period of August 1988 through February 1991 included liability for: (1) paging services, or air time, for customers who owned their own pagers; (2) paging services, or air time, for customers who rented a pager from Almar; (3) paging services consisting of the rental charges on the pagers which Almar rented out; and (4) repeater services. Almar contested only the latter two charges. The Department also assessed a 30% penalty and interest on the amount due, which Almar also contested.\nSubsequently, the Department\u2019s administrative hearings division held a hearing and prepared a recommendation for disposition, which was accepted by the Department as a final administrative decision. The administrative law judge concluded that all of the charges assessed as the telecommunications excise tax were valid, but limited the liability owed for the tax on the rental charges on the pagers which Almar rented out for the period of time after July 1, 1990. The administrative law judge found that the Department\u2019s regulation which went into effect on that date (86 Ill. Adm. Code \u00a7 495.100(b) (1994)) mandated disaggregation and separate identification of exempt and nonexempt charges on billings, or else all charges become nonexempt.\nSubsequently, Almar sought administrative review of the Department\u2019s decision in the trial court. Specifically, Almar contested the assessment for tax on repeater services, the assessment for tax on the pagers which Almar had rented out, and the assessment for the corresponding penalties and interest. After a hearing, the trial court reversed the Department\u2019s decision with regard to the repeater services and the pager rental charges. The trial court affirmed the remaining taxes, plus the 30% penalty and interest on that amount. The Department timely appeals.\nInitially, we note our standard of review. The Telecommunications Excise Tax Act (the Act) (35 ILCS 630/1 et seq. (West 1994)) provides that judicial review of all final administrative decisions of the Department will be in accordance with the Administrative Review Law (735 ILCS 5/3 \u2014 101 et seq. (West 1994)). 35 ILCS 630/16 (West 1994). The Administrative Review Law states: \"The findings and conclusions of the administrative agency on questions of fact shall be held to be prima facie true and correct.\u201d 735 ILCS 5/3 \u2014 110 (West 1994). However, the findings of the administrative agency on questions of law are not binding on this court. DiFoggio v. Retirement Board of the County Employees Annuity & Benefit Fund, 156 Ill. 2d 377, 381 (1993); Cavarretta v. Department of Children & Family Services, 277 Ill. App. 3d 16, 21 (1996). The question of whether something is subject to taxation pursuant to a taxation statute is solely one of law. See Thomas M. Madden & Co. v. Department of Revenue, 272 Ill. App. 3d 212, 215 (1995). Thus, our review is de novo. Thomas M. Madden & Co., 272 Ill. App. 3d at 215.\nWe also note that in Van\u2019s Material Co. v. Department of Revenue, 131 Ill. 2d 196 (1989), just as in the present case, the Department misapplied the law by ignoring the first step of the court\u2019s analysis \u2014 construction of the statute. Van\u2019s Material Co., 131 Ill. 2d at 201-02. Instead, the Department jumps to a \"second tier\u201d of analysis \u2014 determining the boundaries of an exemption \u2014 which is not required in the case at bar. See Van\u2019s Material Co., 131 Ill. 2d at 201-02. We agree with the Department that tax exemption statutes are to be strictly construed in favor of the taxing body and against exemption. Geary v. Dominick\u2019s Finer Foods, Inc., 129 Ill. 2d 389, 414 (1989). However, in the present case, we are not analyzing whether an exemption applies; we are analyzing whether the statute imposing the tax applies. In such a case, the law of this State is clear:\n\" 'Taxing statutes are to be strictly construed. Their language is not to be extended or enlarged by implication, beyond its clear import. In cases of doubt[,] they are construed most strongly against the government and in favor of the taxpayer.\u2019 \u201d (Emphasis added.) Van\u2019s Material Co., 131 Ill. 2d at 202, quoting Mahon v. Nudelman, 377 Ill. 331, 335 (1941).\nIn strictly construing the provisions of the Act, our primary rule is to ascertain and give effect to the intention of the legislature. Van\u2019s Material Co., 131 Ill. 2d at 202. The language of the statute itself is the best indicator of legislative intent. First of America Bank v. Netsch, 166 Ill. 2d 165, 181 (1995); Moon v. Smith, 276 Ill. App. 3d 958, 962 (1995). If the statutory language is clear, the court must give it effect without resorting to other aids of construction (Branson v. Department of Revenue, 168 Ill. 2d 247, 254 (1995); Moon, 276 Ill. App. 3d at 962) and may not read into the statute exceptions, conditions, or limitations that the legislature did not express (Solich v. George & Anna Portes Cancer Prevention Center of Chicago, Inc., 158 Ill. 2d 76, 83 (1994)). Further, rules promulgated by an administrative agency may neither limit nor extend the scope of the statute. Du-Mont Ventilating Co. v. Department of Revenue, 73 Ill. 2d 243, 247-48 (1978).\nIn the present case, we are presented with two taxation issues. The first deals with whether a tax on repeater services is valid under the Act. The second is whether a tax on the rental of pagers is valid under the Act where the communications company did not disaggre-gate the rental charge from the other charges on the customer invoices, but did disaggregate those charges in its own records.\nWe find that the tax on repeater services is not authorized by the Act. The definition of \"telecommunications\u201d in the Act does not specifically include repeaters, but does include:\n\"[Wjithout limitation, messages or information transmitted through use of *** stationary two way radio; *** or any other form of mobile and portable one-way or two-way communications; or any other transmission of messages or information by electronic or similar means, between or among points by wire, cable, fiber-optics, laser, microwave, radio, satellite or similar facilities.\u201d 35 ILCS 630/2(c) (West 1994).\nThe Department argues that this definition of \"telecommunications\u201d is sufficiently broad to encompass repeaters. However, the section of the Act imposing the tax provides, in relevant part:\n\"A tax is imposed upon the act or privilege of originating or receiving intrastate telecommunications by a person in this State at the rate of 5% of the gross charge for such telecommunications purchased at retail from a retailer by such person.\u201d (Emphasis added.) 35 ILCS 630/3 (West 1994).\nA separate section of the Act uses similar language to impose a 5% tax on interstate communications. 35 ILCS 630/4 (West 1994). The parties agree that a repeater\u2019s purpose is to extend the range of a telecommunication device. The repeater does so by receiving a radio signal and retransmitting that signal. Under the terms of the Act, the 5% tax is imposed upon the act of \"originating or receiving\u201d communications. (Emphasis added.) 35 ILCS 630/3, 4 (West 1994). To increase a communicator\u2019s range, a repeater both \"receives\u201d and \"originates\u201d a radio signal. Is the customer to be taxed for each time the repeater receives a message and also for each time it retransmits that message? Clearly, our legislature must not have intended such a result. Moreover, it may also be said that a repeater neither \"receives\u201d nor \"originates\u201d communications, for a repeater is merely a tool of redundancy. Thus, a repeater is akin to a phone cord or the device which transmits radio signals out to the receiver on a wireless phone. There has been no showing that the particular communication the repeater is involved with has not been previously taxed. In light of our requirement to construe the statute strongly in favor of the taxpayer (see Van\u2019s Material Co., 131 Ill. 2d at 202) and the clear language of the Act (35 ILCS 630/3, 4 (West 1994)), we find that the terms of the Act do not impose taxation upon use of repeaters.\nTurning to the second issue on appeal, we find that Almar complied with the Act in disaggregating the charges for the rental pagers from other charges. For both interstate and intrastate communications, the Act imposes a 5% tax of \"the gross charges\u201d for telecommunications purchased at retail. 35 ILCS 630/3, 4 (West 1994). \"Gross charge\u201d is defined in the Act to include \"the amount paid *** for all services and equipment provided in connection [to the telecommunications] by a retailer.\u201d 35 ILCS 630/2(a) (West 1994). However, the Act provides that \"gross charges\u201d shall not include \"charges for customer equipment, including such equipment that is leased or rented by the customer from any source, wherein such charges are disaggregated and separately identified from other charges.\u201d 35 ILCS 630/2(a)(4) (West 1994). The Act does not specify where the charges are to be disaggregated. See 35 ILCS 630/2(a)(4) (West 1994). Thus, the trial court was presented solely with a question of evidentiary proof as to whether or not disaggregation occurred. If Almar did not disaggregate and separately identify the charges for the rental pagers, those charges would be subject to the 5% tax. In the case at bar, the Department presented a prima facie case that no disaggregation had occurred by showing that Almar had not disaggregated the rental charge from other charges on the customer invoices. However, our review of the record discloses that Almar sufficiently rebutted the Department\u2019s case by showing that it had disaggregated and separately identified the rental charges in its own records. In light of our requirement to construe the statute strongly in favor of the taxpayer (see Van\u2019s Material Co., 131 Ill. 2d at 202) and the silence of the Act with regard to where the disaggregation must occur (see 35 ILCS 630/2(a)(4) (West 1994)), we agree with the trial court and determine that the charges for pager rentals were sufficiently disaggregated. Consequently, Almar\u2019s pager rental charges did not constitute \"gross charges\u201d as defined in the Act. 35 ILCS 630/2(a)(4) (West 1994).\nInterestingly, the administrative law judge\u2019s ruling only imposed the tax on the pager rentals from the period of time starting July 1, 1990. On that date, a regulation from the Department went into effect which stated, in part: \"To be exempt, the charges for customer equipment must be disaggregated and separately identified from other charges on the customer\u2019s billing statement.\u201d (Emphasis added.) 86 EL Adm. Code \u00a7 495.100(b) (1994). The administrative law judge found that, after the regulation went into effect, Almar could not claim uncertainty as to whether the charges had to be separated on customer billings. We are compelled to note again that the Act itself does not specify where the charges are to be disaggregated. See 35 ILCS 630/2(a)(4) (West 1994). Rules promulgated by an administrative agency may neither limit nor extend the scope of the statute. Du-Mont Ventilating Co., 73 Ill. 2d at 247-48. Thus, the administrative law judge erred in holding Almar responsible for the 5% tax on the pager rental charges by interpreting the Department\u2019s regulation to extend the scope of the statute.\nThe judgment of the circuit court of Winnebago County is affirmed.\nAffirmed.\nINGLIS and HUTCHINSON, JJ., concur.", "type": "majority", "author": "PRESIDING JUSTICE McLAREN" } ], "attorneys": [ "James E. Ryan, Attorney General, of Chicago (Barbara A. Preiner, Solicitor General, and Cacilia Reich Masover, Assistant Attorney General, of counsel), for appellant.", "Peter A. Savitski, of Rockford, for appellee." ], "corrections": "", "head_matter": "ALAN ARENSON, d/b/a Almar Communications, Plaintiff-Appellee, v. THE DEPARTMENT OF REVENUE, Defendant-Appellant.\nSecond District\nNo. 2\u201495\u20140940\nOpinion filed April 26, 1996.\nJames E. Ryan, Attorney General, of Chicago (Barbara A. Preiner, Solicitor General, and Cacilia Reich Masover, Assistant Attorney General, of counsel), for appellant.\nPeter A. Savitski, of Rockford, for appellee." }, "file_name": "0355-01", "first_page_order": 373, "last_page_order": 379 }