delivered the opinion of the court:
This appeal concerns an attempt by the defendants, the Illinois Department of Revenue (hereinafter the Department), Brian Hamer, as the Director of Revenue, and Alexei Giannoulias, as the Illinois State Treasurer, to impose a use tax, penalty and interest on the purchase price of an airplane acquired by the plaintiff, ATC Air, Inc. (hereinafter ATC Air), a former subsidiary of Irwin Industrial Tool Co., formerly known as American Tool Companies, Inc. (hereinafter Irwin). The plaintiff owned the aircraft in question from April 12, 2000, through April 30, 2002 (the relevant time period). Following an audit, the Department issued a notice of tax liability to the plaintiff, assessing $536,950 in taxes based upon the purchase price of the airplane, in addition to $500 in late filing penalties, and $275,869.94 in accrued interest pursuant to section 3 of the Illinois Use Tax Act (UTA) (35 ILCS 105/3 (West 2006)), for a total of $813,319.94. The plaintiff paid the total amount owed to the Department, but did so under protest pursuant
After agreeing to stipulated facts, the parties filed cross-motions for summary judgment on counts III and IV of the plaintiffs complaint. The circuit court granted the Department’s summary judgment motion on count III, holding that a substantial nexus existed between the aircraft and Illinois so as to subject the plaintiff, as the owner of the aircraft, to Illinois tax liability. The circuit court then went on to grant the plaintiff’s motion for summary judgment on count IV finding that the Department could tax only 4% of the airplane’s value based on the percentage of time that the airplane spent on the ground in Illinois. The circuit court subsequently denied the Department’s motion to reconsider its decision with respect to count IV and additionally found that, pursuant to Supreme Court Rule 304(a) (210 Ill. 2d R. 304(a)), there was no just cause for delay in appealing its ruling. Both parties now appeal contending that summary judgment on both counts should have been made in their favor. For the reasons that follow, we affirm in part and reverse in part.
I. BACKGROUND
1. Stipulated Facts
The record below reveals the following stipulated and undisputed facts. Prior to merging with ATC Air, in October 2003, the plaintiff, Irwin, was an international corporation that manufactured and distributed tools through its many domestic and foreign subsidiaries. Irwin’s domestic subsidiaries included: (1) American Tool Cos. of Arkansas, Inc. (a manufacturer of screws and nut drive bits located in Lexa, Arkansas, with inventory in Greenfield, Indiana); (2) Bergman Tool Manufacturing Co., Inc. (a manufacturer of tools in Buffalo, New York); (3) Chesco Corp. (a manufacturer of tools in Beatrice, Nebraska, with inventory in Greenfield, Indiana); (4) Peterson Manufacturing Co. (a manufacturer of vices, grip-locking clamps and wrenches in Dewitt, Nebraska, with inventory in Greenfield, Indiana); (5) Peterson Development Corp. (a research and development facility, responsible for inventing the vice-grip in Dewitt, Nebraska); (6) Prosnip Corp. (a manufacturer of cutting tools in Beatrice, Nebraska, with inventory in Greenfield, Indiana); (7) Irwin Co. (a manufacturer of, inter alia, taps, dies, bolt extractors, twist drills, in Gorham, Maine; Cumberland, Wisconsin; and Wilmington, Ohio); (8) Unibit Corp. (a manufacturer of drill bits and pliers in Dewitt, Nebraska, with inventory in Greenfield, Indiana); and (9) ATC Air.
Irwin initially had corporate offices in Nebraska, Florida, Ohio, and Wisconsin. Irwin’s worldwide administrative headquarters, including its finance, accounting, marketing, human resources and other administrative departments, as well as executives such as the company’s comptroller, were all located in Lincoln, Nebraska. Irwin’s office in Kenosha, Wisconsin, eventually became the company’s North American headquarters.
In 1995, when Irwin relocated its North American headquarters to Ohio, Irwin’s chairman and chief executive officer (CEO), Alan Peterson, opened an office in Hoffman Estates, Illinois. 1 Initially, this office accommodated only Peterson, his secretary and a small administrative staff, but in 2000, Irwin’s chief financial officer (CFO), chief operating officer (COO) and general counsel were all moved from the Lincoln, Nebraska, office to the Hoffman Estates office. Consequently, after 2000, of Irwin’s seven corporate officers, four had offices in Illinois: (1) CEO, Alan Peterson; (2) COO and president, Jawad Nunes; (3) CFO, Clark Chandler; and (4) corporate vice president (VP) and general counsel, William L. Hoese. Of the remaining three officers, two were in Nebraska (assistant treasurers, David Gentry and Tera Beermann), and one was in Del Mar, California (secretary, William Wright). In addition, of Irwin’s four corporate directors, two were in Illinois, one was in Nebraska, and one was in California. Nevertheless, in the relevant time period, the Nebraska office remained Irwin’s largest office in terms of the number of employees.
Before merging with Irwin, ATC Air was a wholly owned subsidiary of Irwin, incorporated in Nebraska (in 1987), with the sole corporate purpose of providing air transportation services to Irwin and its affiliated companies. Alan Peterson was ATC Air’s sole director and its chairman and CEO. ATC Air’s other officers were Irwin officers.
ATC Air did not operate as an interstate carrier for hire within the meaning of section 3 — 60 of the UTA (35 ILCS 105/3 — 60 (West 2006)). ATC Air maintained all of its business records at its office in Lincoln, Nebraska. Between 2000 and 2002, ATC Air had seven employees including pilots and maintenance workers, all of whom lived and worked in Nebraska.
On December 10, 1999, ATC Air executed an aircraft purchase agreement to acquire a Hawker 800 XP from Raytheon Aircraft Co., located in Wichita, Kansas. Vice president and general counsel Hoese signed the contract on ATC Air’s behalf, listing ATC Air’s address as 2800 West Higgins Road, in Hoffman Estates, Illinois. The promissory note, guaranty, and security agreement for the aircraft, as well as the trade-in-agreement, reflected the address in Hoffman Estates. The purchase price for the airplane was $7,520,710. ATC Air accepted delivery of the aircraft in Little Rock, Arkansas, and then immediately flew the plane to Lincoln, Nebraska, where it was hangared.
On April 12, 2000, ATC Air registered the aircraft with the Federal Aviation Administration (FAA) by filing an aircraft bill of sale and an aircraft registration application with the FAA. Both documents reflected the Hoffman Estate’s office as ATC Air’s address. On June 5, 2000, ATC Air filed an amendment to both the aircraft bill of sale and the aircraft registration application changing the address from the Hoffman Estates office to the Lincoln, Nebraska, office. From that point on, ATC Air’s registration applications and
ATC Air owned the airplane from April 12, 2000, through April 30, 2002. The airplane was used for three primary purposes: customer visits, transporting ATC employees from one location to another, and matters relating to acquisitions and lawsuits. The passengers that flew on the aircraft included (1) 77 Irwin employees; (2) 20 customers; (3) 5 officers; (4) 4 directors; (5) 3 outside counsel; (6) 9 outside consultants and accountants; (7) 1 shareholder/owner; and (8) 6 friends and/or relatives of the foregoing passengers. All maintenance on the aircraft was done in Nebraska.
Between April 12, 2000, and April 30, 2002, from its hangar in Lincoln, Nebraska, the aircraft flew a total of 290 days, flying to locations throughout the United States, Canada, and Mexico, specifically including flights to Illinois. The flight log for this relevant period attached to the stipulated facts by the parties reveals a total of 734 flight segments, of which 269 originated or ended at an Illinois airport.
On April 25, 2002, ATC Air filed a Nebraska personal property tax return and claimed an exemption for the aircraft. ATC Air was not subject to the Nebraska use tax on the aircraft because it qualified as an exempt carrier for Nebraska sales and use tax purposes. ATC Air never filed a sales/use tax return to pay use tax in Illinois on the aircraft.
In the meantime, the Illinois Department of Revenue itself audited the purchase of the aircraft by ATC Air and determined that a use tax was due on the transaction. As a result, on April 7, 2004, the Department issued a notice of tax liability to ATC Air, assessing $536,950 in use tax, $500 in penalties, with $275,869.94 in accrued interest, for a total balance of $813,319.94.
In October 2003, ATC Air merged into Irwin. On behalf of ATC Air, Irwin paid the total amount owed to the Department but did so under protest and timely filed this action pursuant to the Protest Monies Act (30 ILCS 230/2a.l (West 2002)).
2. Procedural History
On June 28, 2004, the plaintiff filed a six-count complaint for declaratory judgment and an injunction against the defendants. In count I, the plaintiff sought a preliminary and permanent injunction to protect the protested funds from being transferred into the Departments’ general revenue fund. In count II, the plaintiff asserted that the aircraft was not subject to the Illinois use tax (35 ILCS 105/3 (West 2002)), alleging that it was never used “in this State” within the meaning of section 3 of the UTA (35 ILCS 105/3 (West 2002)) because upon purchase, it was accepted in Little Rock, Arkansas, immediately flown to Lincoln, Nebraska, and never based in Illinois. In count III, the plaintiff alleged that even if the UTA applies, the Department should still be precluded from imposing a use tax on the aircraft under article I, section 8, of the United States Constitution, i.e., the commerce clause (U.S. Const., art. I, §8) because the aircraft did not have a “substantial nexus” to Illinois. In the alternative, in count IX the plaintiff argued that even if a use tax were permissible, under the commerce clause (U.S. Const., art. I, §8) the amount assessed by the Department was improper and should have been based on the actual use of the aircraft in Illinois, rather than the total purchase price. In count Y, the plaintiff raised a due process argument, challenging the audit procedure used by the Department in auditing Irwin in the midst of the passage of the Tax Delinquency Amnesty Act (35 ILCS 745/10 (West Supp. 2003) (effective October 1, 2003)), which extended the time for
On August 10, 2004, the plaintiff made a second payment to the Department under protest in the amount of $6,596.70 representing additional accrued interest, and sought leave to file its first amended complaint. The court granted the plaintiff’s request on August 25, 2004. The first amended complaint raised the same arguments as the original but provided additional factual allegations.
The Department was preliminarily enjoined from depositing the protested funds into the general revenue fund, and the parties proceeded with discovery. On January 29, 2007, the parties entered into a stipulation of facts, which has been summarized above, and which included numerous exhibits, as well as the aircraft’s flight log for the relevant two-year audit period.
Both parties subsequently moved for summary judgment on counts III and IV disputing the constitutionality of the use tax based on the commerce clause (U.S. Const., art. I, §8). A hearing on the matter was heard by the circuit court. At that hearing, the plaintiff argued that the court should look to the total time period that the plaintiff owned the aircraft, not just the flight time, to determine whether it had a substantial nexus to Illinois so as to be subject to the Illinois use tax. According to the plaintiff, during the entire period it was owned by the plaintiff, the aircraft spent little of its ground time in Illinois, specifically 639 hours and 41 minutes out of a total of 17,520 hours owned by the plaintiff, i.e., 3.65% of the total time. In addition, the plaintiff alleged that the aircraft did not spend many nights in Illinois; specifically out of a total of 730 nights, the aircraft spent 25 nights in Illinois versus 509 nights in Nebraska, i.e., 3.42% of all of its nights in Illinois. Accordingly, the plaintiff asked that the circuit court find that there was no substantial nexus with Illinois. In the alternative, the plaintiff argued that the Department’s use tax violated the fair apportionment requirement of the commerce clause because it was based on the purchase price of the aircraft rather than the actual time that the aircraft was used by the plaintiff in Illinois.
On the other hand, the Department argued that nexus should be determined by the degree of actual use in flight, rather than by proportionate hangar time. According to the Department, the flight log established that there was a substantial nexus to Illinois because it showed that the aircraft was flown to and/or from Illinois on approximately half of the total days that it was in flight, i.e., of the 290 days the aircraft spent in flight, on 143 days it was at an Illinois airport (49.3% of the total days in flight). In addition, with respect to the amount taxed, the Department asserted that under the plain language of the UTA the amount of tax is to be determined based upon the purchase price or the fair market value of the aircraft and not the percentage of time that the aircraft was used in Illinois. 35 ILCS 105/3 — 10 (West 2002). The Department argued that in requiring “fairly apportioned” taxes, the commerce clause of the United States Constitution (U.S. Const., art. I, §8) is primarily concerned with preventing multiple taxation by different
After hearing all the arguments, on July 9, 2007, the circuit court entered a written memorandum order and decision granting the Departments’ motion for summary judgment on count III of the plaintiffs complaint, but granting the plaintiffs motion for summary judgment on count IV Based upon its own analysis, the circuit court first found a substantial nexus existed between the aircraft and Illinois so as to permit the Department to impose a use tax. However, the circuit court went on to conclude that the amount of tax imposed on the plaintiff was erroneously ascertained because it had been based on the full purchase price of the aircraft. The circuit court held that because “the fair apportionment prong of the commerce clause limits any tax the Department can impose to a value that reflects the amount of time the [aircraft] was actually in Illinois,” the “more equitable solution would be [to] tax only the percentage of actual use the aircraft was in Illinois, in this case approximately 4%.”
After the circuit court’s original decision, the Department filed a timely motion for reconsideration of count IV On October 23, 2007, the circuit court issued a memorandum decision and judgment denying the Department’s motion for reconsideration reiterating that a use tax on the full purchase price of the aircraft was unconstitutional. The parties appealed separately but their appeals were consolidated. The plaintiff appeals the circuit court’s ruling on count III of its first amended complaint, and the Department appeals the circuit court’s ruling on count IV
II. ANALYSIS
At the outset, we note that we review the circuit court’s decision to grant or deny a motion for summary judgment de novo. Home Insurance Co. v. Cincinnati Insurance Co.,
1. The Illinois Use Tax
In Illinois, the taxation scheme commonly known as the “sales tax” is comprised of two complementary statutes, the Retailers’ Occupation Tax Act (ROTA) (35 ILCS 120/1 et seq. (West 2002)) and the
The use tax is complementary to the retailers’ tax because of the way in which the use tax is assessed and collected. Weber-Stephen Products, Inc.,
“(1) assures that each transaction involving the sale for use of personal property to an Illinois entity is taxed, regardless of where the purchase occurs, (2) simplifies tax accounting, particularly since the ROTA and UTA taxes areassessed at the same base rate [citation], and (3) gives the Department the advantage of pursuing unpaid sales tax by enforcement action against either the seller of personal property (ROTA) or its purchaser-user (UTA).” Container Corp. of America, 293 Ill. App. 3d at 1093 (citing Mobil Oil Corp. v. Johnson,93 Ill. 2d 126 , 135 (1982); People v. Buffalo Confectionery Co.,78 Ill. 2d 447 , 460 (1980); Klein Town Builders, Inc.,36 Ill. 2d at 303-04 ; and 86 Ill. Adm. Code §150.301 (1994)).
Where, as here, the retailer is located outside of Illinois and therefore has no UTA or ROTA obligations, the purchaser-user in Illinois must pay the use tax directly to the state. American River Transportation Co. v. Bower,
2. Constitutional Limits on the Illinois Use Tax
The present case concerns the restraints that article I, section 8, of the United States Constitution, i.e., the commerce clause (U.S. Const, art. I, §8), places on Illinois’s ability to impose a use tax on the purchase of an aircraft that was bought in a different state, but that is being used by the plaintiff in Illinois. Article I, section 8, of the United States Constitution expressly authorizes Congress to “regulate Commerce with foreign Nations, and among the several States.” U.S. Const., art. I, §8. The United States Supreme Court has consistently interpreted this express grant of congressional authority as implicitly containing a negative command, known as the dormant commerce clause, which limits the power of the state to tax interstate commerce even in the absence of congressional legislation. See Quill Corp. v. North Dakota,
In the present case, the parties dispute whether the use tax imposed by the Department on the plaintiffs purchase of the aircraft met the first two prongs of the Complete Auto test. We begin by addressing the substantial nexus requirement.
3. Substantial Nexus
The plaintiff asserts that the trial court erred when it found that as a matter of law the aircraft had a substantial nexus to Illinois as required under the first prong of the Complete Auto test, so as to permit the Department to impose a use tax on its purchase. Specifically, the plaintiff contends that the constitutional test is a substantial nexus and not merely any nexus. The plaintiff contends that because its principal place of business is in Nebraska, and because the aircraft it purchased was permanently based, hangared, and maintained in Nebraska, only making brief visits to Illinois to drop off or pick up passengers, while continually moving in interstate commerce, thereby spending a nominal amount of time (less than 4% of its total ground time) in Illinois, there is no substantial nexus between the aircraft and Illinois so as to permit the Department to impose a use tax on it. For the reasons that follow, we disagree.
We start by noting that the “substantial nexus” requirement imposed by the commerce clause on a state’s ability to tax an out-of-state entity is not simply like the “minimum contacts” requirement, imposed under the due process clause out of concerns for fairness to the individual taxpayer, but rather is a construct designed to limit a state’s ability to burden interstate commerce. See Quill,
There is some authority for the proposition that a substantial nexus can be established by showing a sufficient physical connection between the taxpayer and the taxing state, without necessitating a showing of that same connection with respect to the activity or use of the property being taxed and the taxing state. See, e.g., 68 Am. Jur. 2d Sales & Use Taxes §188 (2009) (“The required nexus can be either between the out-of-state entity being taxed and the taxing state, or between the activity that the state seeks to tax and the taxing state”); see also Brown’s Furniture Inc.,
In either event, as shall be discussed more fully below, in the present case, the substantial nexus requirement is sufficiently established both with respect to the taxpayer and the use of the taxpayer’s property in Illinois.
With respect to the taxpayer’s physical presence within the state, Illinois courts have consistently held that to satisfy the substantial nexus requirement, physical presence inside the taxing state need not be substantial, but must be more than “slight.” See Brown’s Furniture, Inc.,
Following this same principle, with respect to the connection between the taxed activity (i.e., use of tangible property) and the taxing state, Illinois courts have found a substantial nexus so as to justify an imposition of a use tax in a variety of situations where the activity (i.e., use of some tangible property) inside the state was “more than slight.” See, e.g., Archer Daniels Midland Co. v. Department of Revenue,
While we acknowledge that all of these decisions relied on relatively extensive physical presence of the property within the state as a factor in establishing nexus, none of them reject the notion that other factors, in addition to time spent, may be considered in determining the extent of physical presence, i.e., the use of the property in the state. Indeed, physical presence is not gauged simply by its duration, but by its significance in relation to the overall use and function of the property within the state.
While no Illinois decisions involving such other considerations have been brought to our attention by the parties, the decision of the Missouri Supreme Court in Director of Revenue v. Superior Aircraft Leasing Co.,
Similarly, in the present case, even though the plaintiff’s aircraft was hangared and maintained outside of Illinois, the aircraft’s flight log, stipulated to by the parties, established that in the relevant two-year time period, the aircraft made 290 takeoffs and landings at Illinois airports, which included flights in and out of Illinois on nearly half of the days for which any flights were made. In fact, the flight log established that one-third of the total flight segments for the aircraft were logged on flights to and from Illinois, albeit some of those flights included landings in other places as well as Illinois. In addition, according to the flight log the
Moreover, in the present case, the record demonstrates that throughout the relevant two-year period, the aircraft frequently and regularly flew to Illinois at the behest of the plaintiffs corporate off!cers to pick them up or drop them off at destinations throughout the United States. In that respect, the record reveals that the aircraft was initially purchased to provide transportation services for the plaintiff s executives and employees, and in fact did so, often transporting the plaintiffs top three executives (the CEO, Alan Peterson; the president and COO, Jawad Nunes; and the general counsel and corporate VR William Hoese) to and from Illinois. In fact, when the aircraft was initially purchased by the plaintiffs then-subsidiary, ATC Air, the sole corporate purpose of ATC Air was to provide transportation services to the plaintiffs officers and employees. Moreover, when the aircraft was initially purchased, the purchase agreement, as well as the bill of sale and registration application filed with the FAA, all listed the Illinois corporate office as ATC Air’s primary address. Thus, whatever physical presence the plane had with Illinois, through the many takeoffs and landings from Illinois runways, as well as the nights that it spent in Illinois, was not merely coincidental, but was inherently connected to its basic purpose and function in this state. As such, the plaintiff cannot now legitimately contend that by purchasing and using the aircraft in the manner that it did, it did not avail itself of the privilege of doing business in Illinois, so as to be subject to the Illinois use tax. National Geographic Society v. California Board of Equalization.,
Plaintiff attempts to distinguish Superior Aircraft Leasing by pointing out that the airplane in that case occasionally spent several days or approximately a week in Missouri (see Superior Aircraft Leasing,
The plaintiff also attempts to distinguish Superior Aircraft Leasing by contending that in that case the taxpayer was a corporation based in Missouri, and therefore had obvious contacts with the state so as to meet the substantial nexus requirement, whereas, in this case, the plaintiff is neither based nor has a principle place of business in Illinois. We find this distinction unpersuasive.
Although it is undisputed here that the plaintiffs principal place of business is in Nebraska, the record establishes that the plaintiff had a demonstrated physical corporate presence in Illinois. In fact, of the plaintiffs seven corporate officers, four of the top executives are based and work from offices in Illinois: (1) the CEO, Alan Peterson; (2) the president and COO, Jawad Nunes; (3) the CFO, Clark Chandler; and (4) the corporate VP and general counsel, William Hoese. The United States Supreme Court has consistently held that this quantity of in-state corporate presence by a company not based in the taxing state is sufficient to satisfy the
In fact, the United States Supreme Court has invalidated a state tax only where the in-state presence of the out-of-state corporation has been truly de minimis, such as where the only connection between the out-of-state corporation and the taxing state is by common carrier or the United States mail. General Motors Corp. v. City & County of Denver,
Accordingly, we find that there was a sufficient physical connection between both the taxpayer and the taxable property with Illinois, so as to meet the threshold requirements of “substantial nexus” and permit the Department to impose a use tax on the sale of the aircraft. We now turn to the fair apportionment contention.
4. Fair Apportionment
On appeal, the Department contends that the circuit court erred when it found as a matter of law that the use tax imposed on the plaintiff and calculated based upon the entire value of the aircraft violated the “fair apportionment” prong of the Complete Auto test, so as to invalidate the tax. We agree.
According to the United States Supreme Court, to be internally consistent, a tax must be so structured that if every state in the United States were to impose an identical tax, it would not result in an object being burdened by multiple taxation. Goldberg,
“ ‘create a national system under which the first state of purchase or use imposes the tax. Thereafter, no other state taxes the transaction unless there has been no prior tax imposed ... or if the tax rate of the prior taxing state is less, in which case the subsequent taxing state imposes a tax measured only by the differential rate.’ ” Jefferson Lines,514 U.S. at 194-95 ,131 L. Ed. 2d at 277-78 ,115 S. Ct. at 1343 , quoting KSS Transportation Corp. v. Baldwin,9 N.J. Tax 273 , 285 (1987).
See also 2 J. Hellerstein & W. Hellerstein, State Taxation 1il8.08[l] (1992) (noting that the District of Columbia and 44 of the 45 states that impose sales and use taxes permit such a credit or exemption for similar taxes paid to other states).
In the present case, the plaintiff concedes that the use tax imposed on the full value of the aircraft was internally consistent because the Illinois UTA contains a credit provision,, exempting the taxpayer from liability on the use or sales tax amount already owed and paid in another state (see 35 ILCS 105/3 — 55(d) (West 2000)).
3
The plaintiff nevertheless contends
In that respect, we first note that “[n]o internally consistent tax has failed the external consistency test for lack of further apportionment.” General Motors Corp.,
In Archer Daniels Midland,
“[The plaintiff] has not claimed that it paid taxes on its planes elsewhere; therefore, it has not been subject to multistate taxation. The sales and use taxes are complementary and equalize the burden on interstate and intrastate transactions. The sales tax is measured by the purchase price of an item, without regard to the amount of use the item will receive, and so is the use tax. Nor is the use tax a precise charge for benefits provided by the state. [The plaintiff] enjoys the protection of Illinois laws, access to its legal system, and innumerable other services. Because [the plaintiff] receives all these benefits, it is properly subject to taxation in this State.” Archer Daniels Midland,170 Ill. App. 3d at 1022 .
Similarly, in Whitcomb Construction Corp.,
“The Commerce Clause does not require apportionment in addition to a tax credit. The rule of Complete Auto *** requiring a tax on interstate commerce to be ‘fairly apportioned’ is satisfied here. The state has provided a tax credit in lieu of apportionment. This credit, not unlike a proportionate tax, eliminates the possibility of cumulative use tax liability. The Vermont legislature has chosen not to incorporate apportionment within the use tax scheme. This Court, therefore, is without power to impose such a requirement. [Citation.] We agree with the Commissioner that apportionment of this tax is neither constitutionally required nor legislatively authorized.” Whitcomb Construction Corp.,144 Vt. at 473 ,479 A.2d at 168 .
This rationale is even more sharply enunciated in General Motors Corp.,
The court first explained that the use tax by its very nature is paid once and compensates for a sale that took place in
“[U]se taxes are externally consistent if the contested tax contains a credit that operates to eliminate multiple taxation. This rule holds true regardless of how long the property remains in the taxing jurisdiction. If the use tax in question contains an effective credit, it is externally consistent. *** [W]e decline to impose an apportionment requirement where the responsible legislative body has chosen not to enact one.” General Motors,990 P.2d at 72-73 .
The Minnesota Supreme Court similarly rejected a circuit court’s apportionment of a use tax in Miller,
“[A]ny ‘exercise of a right or power incidental to ownership’ within the state constitutes a use sufficient to impose full use tax liability [citations], even when the property is located and used within the state for only brief periods of the year. [Citations.] *** ‘[E]ven a very brief and limited use *** is sufficient to justify the imposition of the tax.’ [Citation.] *** [T]his construction also comports with the purpose for which use tax is imposed. By complementing the sale tax, the use tax eliminates incentive to make major purchases in states with a lower sales tax. [Citation.] This purpose would be substantially frustrated if the allocation formula adopted by the Tax Court were allowed to stand.” Miller,359 N.W.2d at 621-22 .
We note that in opposition to this overwhelming precedent, the plaintiff cites to only one Alabama case, Boyd Brothers Transportation v. State Department of Revenue,
Consequently, in light of the overwhelming precedent supporting the view that to meet the external consistency requirement, a use tax need not be apportioned so long as a credit provision is in place, we find that the circuit court erred when at the request of the plaintiff it limited the use tax to 4% of the value of the aircraft. In that respect, we note that, just as in the aforementioned cases, our legislature has provided for a flat 6.25% use tax on the purchase price of any tangible property being used in Illinois (see 35 ILCS 105/3 — 10 (West 2002) (the use tax is imposed “at the rate of 6.25% of either the selling price or the fair market value, if any, of the tangible personal property”)),
Moreover, in this case particularly, we find that to permit the court to attempt to apportion the use tax on the basis of the actual usage of the aircraft in Illinois would prove both burdensome and impracticable. In that respect, we note that unlike apportionment formulas based on the number of miles a bus, train or truck has traveled within a taxing jurisdiction, which have been endorsed by the United States Supreme Court (see Goldberg,
III. CONCLUSION
Accordingly, for all of the foregoing reasons, we affirm the judgment of the circuit court with respect to count III and reverse the judgment with respect to count IV of the plaintiff’s amended complaint.
Affirmed in part and reversed in part with directions to restore to the Department the full tax at the statutory rate without apportionment.
McBRIDE, and HOWSE 4 , JJ., concur.
Notes
This office is located at 2800 West Higgins Road in Hoffman Estates, Illinois.
As on appeal neither party raises any arguments with respect to the Tax Amnesty Delinquency Act, we need not set forth in any detail the provisions of this Act or the plaintiffs arguments with respect to this statute.
Section 3 — 55 of the UTA states in pertinent part:
“To prevent actual or likely multistate taxation, the tax imposed by this Act does not apply to the use of tangible personal property in this State under the following circumstances:
(d) The use, in this State, of tangible personal property that is acquired outside this State and caused to be brought into this State by a person who has already paid a tax in another State in respect to the sale, purchase, or use of that property, to the extent of the amount of the tax properly due and paid in the other State.” 35 ILCS 105/3— 55(d) (West 2006).
This opinion was initially oraled on May 28, 2009, before Justices Joseph Gordon, Margaret Stanton McBride, and Denise O’Malley. In the interim between oral arguments and the filing of this opinion, Justice Denise O’Malley retired, thereby necessitating the substitution of Justice Nathaniel Howse, Jr., to replace Justice O’Malley. Justice Howse has read the briefs and record and has listened to the tape of the oral argument.