Village Approves Resolution to Join RTA Lawsuit

Lemont trustees formally agreed Monday to move forward with a Regional Transportation Authority lawsuit that claims the towns of Kankakee and Channahon are using shell offices to improperly divert $20 million in sales tax revenue each year.

During its business meeting Monday night, the village board unanimously approved a resolution to become a plaintiff in the RTA complaint, . The lawsuit alleges that Kankakee and Channahon that has some Chicago businesses routing their sales through satellite offices in municipalities with low sales tax rates.

The result, according to a Chicago Tribune report, is that companies can sell products at a lower tax cost and make their products more marketable.

Chicago officials claim that Kankakee and Channahon are benefiting from the sales tax, costing the RTA region millions of dollars each year. RTA is looking to recoup at least $100 million in funds diverted since 2004, according to Channahon-Minooka Patch.

Lemont's involvement in the lawsuit by the RTA. The villages of Tinley Park, Stickney and Forest View also signed on to the complain.

Village Attorney Dan Blondin said Monday night that the recommendation to sign on as a municipal plaintiff was made during a closed session meeting Sept. 12. A formal resolution was needed to move forward, he said.

The village will not incur any of the RTA's legal expenses during the course of litgation, Blondin said.

"The intent of (the lawsuit) is to correct the situation so that sales tax is repaid to the communities where the sales actually take place," he said.

According to the RTA release, the lawsuit is based on legislation passed in 2004 that forbids any municipality from entering into a tax sharing agreement with a company that does not conduct legitimate business within the municipality and should be paying taxes to another local  government.

“The municipalities that are joining the lawsuit today represent just a fraction of the communities across the state that is being hurt by sales tax avoidance," said Joe Costello, Executive Director of the RTA. "It is our hope that we can avoid drawn-out litigation and work with the General Assembly to pass legislation to stop sales tax avoidance agreements.”

Lemont Mayor Brian Reaves said during the meeting that the village joined the lawsuit "to foster change, not bankrupt other towns."

"This is not a witch hunt of our friends in Will County that are named in the suit," he said. "They need to change (the laws) ... It's very important that the tax dollars stay in town to go to our citizens, our schools and the programs we have here."