Shakman v. Department of Revenue
146 N.E.3d 640
Ill. App. Ct.2020Background
- Michael L. Shakman bought a Schleicher glider in 2008, registered it, and paid Illinois general use tax.
- In 2014 he executed and filed with the FAA a bill of sale transferring title from himself individually to himself as trustee of the Michael L. Shakman Revocable Trust for estate‑planning purposes; he continued to use and pay for the aircraft.
- Shakman did not pay an additional use tax when the FAA record showed the change in legal ownership.
- The Illinois Department of Revenue assessed an Aircraft Use Tax (6.25%) plus penalty and interest (~$7,511); Shakman paid under protest and sued for a refund and declaratory relief and sought to enjoin transfer of the protest amount.
- The trial court granted summary judgment to the Department, holding the transfer to the trust was a taxable “transfer” under the Aircraft Use Tax Law; Shakman appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether transferring an aircraft from an individual to the same individual as trustee of a revocable trust is a taxable "transfer" under the Aircraft Use Tax Law | Shakman: transfer is form only; because the trust is revocable and he retained economic/control rights, no new taxable acquisition occurred | Dept: statute taxes acquisitions by "transfer," and "person" includes trustees; legal transfer of title to trustee is a taxable event absent an exemption | Transfer to Shakman as trustee is a taxable event; summary judgment for Department affirmed |
Key Cases Cited
- Pielet v. Pielet, 2012 IL 112064 (statutory interpretation and de novo review of cross‑motions for summary judgment)
- Board of Education of Springfield School Dist. No. 186 v. Attorney General, 2017 IL 120343 (use plain statutory language to determine legislative intent)
- Department of Revenue v. Joseph Bublick & Sons, Inc., 68 Ill. 2d 568 (1977) (tax statutes given common‑sense meaning to facilitate collection)
- Kankakee County Bd. of Review v. Property Tax Appeal Bd., 226 Ill. 2d 36 (2007) (tax statutes strictly construed in favor of taxpayer)
- Hanley v. Kusper, 61 Ill. 2d 452 (trusts create distinct legal relationships; trustee and settlor legally distinct)
- Burnet v. Guggenheim, 288 U.S. 280 (1933) (tax analysis focuses on control/economic benefit over formal title)
- Sanford's Estate v. Commissioner, 308 U.S. 39 (1939) (revocable trusts: gift incomplete while settlor retains power to revoke)
- Imaging Servs., Inc. v. Oklahoma Tax Comm'n, 866 P.2d 1204 (Okla. 1993) (distinguishing transfers of bare legal title for FAA/compliance purposes from taxable transfers of beneficial ownership)