CitiBank N.A. v. The Illinois Department of Revenue
2016 IL App (1st) 133650
| Ill. App. Ct. | 2016Background
- Citibank and Chrysler sought refunds of Retailers’ Occupation Tax Act (ROTA) taxes paid on sales financed through consumer credit/installment accounts; refunds related to portions of taxes attributable to accounts later written off as bad debt.
- Retailers offered financing to consumers, then assigned consumer accounts and all rights (including refund rights) to Citibank or Chrysler on a without-recourse basis; assignees paid retailers the full financed amounts (including tax), and retailers remitted tax to the State.
- Both claimants deducted the bad debts on federal returns and asked the Illinois Department of Revenue for refunds under section 6 of ROTA; the Department denied both claims and ALJ recommended denial on several grounds including lack of standing and failure to remit tax.
- Circuit court reversed the Department as to Citibank (finding assignment gave Citibank standing and procedural deficiencies were moot) and affirmed as to Chrysler; the Department appealed Citibank decision, and Chrysler appealed but the appellate court dismissed Chrysler’s appeal for lack of jurisdiction due to untimely appeal procedures.
- The appellate court affirmed the circuit court judgment for Citibank, holding assignees can pursue refunds via assignment, and dismissed Chrysler’s appeal because Chrysler failed to timely appeal the circuit court’s original final order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing / Assignability of refund rights | Assignee (Citibank/Chrysler) steps into retailer’s shoes via assignment and thus may seek ROTA refund for uncollected tax | Dept: only the remitting retailer may claim refund; assignments prohibited by statute or public policy | Assignments are permitted; assignee has standing to pursue refund when retailer would have been entitled absent assignment (Citibank affirmed) |
| Requirement to refund collected tax to consumer first | Assignee need not refund taxes to consumers when consumers never paid those specific tax amounts | Dept: section 6 requires claimants to repay amounts collected from purchasers before claiming refund | Section 6 limits refunds to amounts paid but not collected from consumers; where taxes were uncollected, assignee may seek refund without repaying consumers |
| Procedural compliance / documentation for refund claim | Citibank: parties stipulated refund amount attributable to uncollected tax, so missing merchant IDs/supporting docs were moot | Dept: Citibank failed to provide required info under ROTA §6 and regs, risking improper refunds | Where parties stipulated the refund amount equals uncollected ROTA tax, lack of additional documentation was moot and claim could proceed |
| Jurisdiction / timeliness of appeal (Chrysler) | Chrysler: supplemental opinion (entered Mar 3, 2015) restarted appeal time; notice timely filed | Dept: original March 14, 2014 order was final; Chrysler’s appeal was untimely and section 2-1401 grant was final on Dec 16, 2014 | Chrysler’s appeal dismissed for lack of jurisdiction—notice of appeal was untimely; trial court lacked authority to enter substantive supplemental opinion after 30 days |
Key Cases Cited
- Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351 (explanation of ROTA and Use Tax Act relationship and tax mechanics)
- Kleinwort Benson N. Am., Inc. v. Quantum Fin. Servs., Inc., 181 Ill. 2d 214 (assignability is the rule; nonassignability is the exception)
- Amalgamated Transit Workers' Union v. Pace Suburban Division, 407 Ill. App. 3d 55 (definition and effect of assignment)
- People ex rel. Stone v. Nudelman, 376 Ill. 535 (statutory silence on assignability permits assignment of credit memoranda)
- One 1999 Lexus v. (People v. One 1999 Lexus), 367 Ill. App. 3d 687 (stipulations are contracts and should not be read to render language meaningless)
- Keener v. City of Herrin, 235 Ill. 2d 338 (appellate review limitations when underlying trial court lacked jurisdiction to enter order)