The City of Kankakee v. Department of Revenue
2013 IL App (3d) 120599
| Ill. App. Ct. | 2013Background
- In November 2011 the Department issued a Long Term Distribution Adjustment accusing Kankakee of receiving $540,811 in sales tax revenues that should have gone to Glendale Heights and stating it would recoup the amount over eight months.
- The Department claimed the adjustment was confidential under the Retailers’ Occupation Tax Act and that the revenues were redistributed per state law.
- Kankakee filed December 2011 a six-count complaint seeking administrative review, writ of prohibition, and preliminary and permanent injunctions, arguing jurisdiction under the Administrative Review Law and challenging the adjustment’s legality.
- The Department attached an affidavit detailing the TLV misallocation process, the nature of adjustments (misallocations, audits, refunds, amended returns) and the specific offsets and reallocations involved in this case.
- A hearing resulted in the trial court granting a preliminary injunction, finding administrative review applicable and that Kankakee purportedly demonstrated irreparable harm and likelihood of success on the merits; the Department sought modification and appeal.
- The Department argued sovereign immunity and that Champaign-type six-month limitations applied; the court concluded it had original jurisdiction and affirmed the injunction, while the dissent questioned jurisdiction and sovereign immunity implications.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction for review of the Department's adjustment | Kankakee asserted Review Act or common-law certiorari jurisdiction. | Department argued no Review Act review and limited jurisdiction; adjustment is executive/administrative. | Trial court had jurisdiction to review under common law certiorari/prohibition despite lack of Review Act applicability. |
| Sovereign immunity bar | Kankakee sought injunctive relief against a state agency; not a monetary claim against state funds. | Sovereign immunity bars such actions against state agencies for monetary relief. | Sovereign immunity did not bar the injunctive challenge to the Department’s distribution; action not against the State for a monetary judgment. |
| Six-month limitations period applicability | Certain misallocations are not time-barred if tied to audits; Champaign waa legislatively overruled for some corrections. | Six-month offset period applies to taxpayer-location misallocations; audits may be broader. | There is a fair question whether the six-month period bars certain redistributions; supports likelihood of success on the merits. |
| Grant of preliminary injunction | Injury to finances and services without injunction; likelihood of success on merits based on evidence of discrepancies. | No right to administrative review; potential unjust enrichment; no adequate remedy at law. | Trial court properly granted the preliminary injunction preserving the status quo. |
| Modification of injunction | Modification to the full offset or to Glendale Heights only; standing to challenge the entire adjustment. | Limit injunction to the Glendale Heights reallocation only; Kankakee lacks standing for others. | Court did not err in denying modification; maintained broader injunction until further order. |
Key Cases Cited
- Hartlein v. Illinois Power Co., 151 Ill. 2d 142 (1992) (preliminary injunction standards; irreparable harm)
- City of Springfield v. Allphin, 74 Ill. 2d 117 (1978) (sovereign immunity and action against state officials)
- Meyer v. Department of Public Aid, 392 Ill. App. 3d 31 (2009) (sovereign immunity and state liability scope)
- Champaign v. Department of Revenue, 89 Ill. App. 3d 1066 (1980) (no limitation for corrections in distribution (Legislative shift discussed))
- Allphin, 74 Ill. 2d 125 (1978) (review of state agency action; public remedy)