Gem Electronics of Monmouth, Inc. v. Department of Revenue
Annotate this Case
NO. 4-96-0181
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
GEM ELECTRONICS OF MONMOUTH, INC., ) Appeal from
Plaintiff-Appellee and ) Circuit Court of
Cross-Appellant, ) Sangamon County
v. ) No. 94MR0253
THE DEPARTMENT OF REVENUE, )
Defendant-Appellant and ) Honorable
Cross-Appellee. ) Donald M. Cadigan,
) Judge Presiding.
_________________________________________________________________
PRESIDING JUSTICE STEIGMANN delivered the opinion of
the court:
In February 1990, plaintiff, the Illinois Department of
Revenue (Department), assessed taxes on defendant, Gem Elec-
tronics of Monmouth, Inc. (Gem), under the Telecommunications
Excise Tax Act (Telecommunications Act) (35 ILCS 630/1 through 21
(West 1992)). Gem contested the taxes, and the Department
conducted an administrative hearing in September 1993. In June
1994, the Department issued a decision upholding the assessment.
In August 1994, Gem filed a complaint seeking adminis-
trative review of the Department's decision, and in January 1996,
the circuit court reversed the Department's decision. The
Department appeals, arguing that the court erred because (1)
Gem's customers originate and receive "telecommunications;" and,
therefore, (2) Gem is a "retailer" pursuant to the Telecommunica-
tions Act. We agree with the Department and reverse.
I. BACKGROUND
Gem has been engaged in electronic sales and service in
Monmouth, Illinois, since 1976. As part of its business, Gem
sells, maintains, and repairs mobile radio equipment, including
mobile units and base stations, operates paging and mobile
telephone services, and operates a "community repeater" business.
A "repeater" is a device used in connection with two-
way radio communication. Two-way radios, typically made up of a
base station and mobile units, originate and receive messages on
the FM band. However, they generate a relatively weak signal
with a limited range. The repeater is an unattended mobile relay
station which receives a signal generated by a two-way radio,
processes it, strengthens it, and then retransmits it, allowing a
distant two-way radio to receive the signal.
A "community repeater" is one type of shared mobile
radio system. Shared systems "involve either an arrangement
where the licensee offers excess capacity to unlicensed eligible
users or where each user of the licensed facilities is individu-
ally licensed." In re Implementation of Sections 3(n) and 332 of
the Communications Act Regulatory Treatment of Mobile Services, 8
F.C.C. Rec. 7988, 7990 n.12 (1993). The latter arrangement is
called a "multiple-licensed system." Multiple-licensed systems
may be either nonprofit cooperatives or "community repeaters,"
where one of the system licensees or an unlicensed third party
manages the system for the other licensed users. Implementation,
8 F.C.C. Rec. at 7990 n.12.
The Federal Communications Commission (FCC) does not
license the repeater itself, nor does the FCC license repeater
operators who are not themselves mobile radio operators. In-
stead, the FCC requires the individual mobile radio operators to
hold licenses to operate on designated frequencies. The communi-
ty repeater is licensed to those individual operators. In re An
Inquiry Concerning the Multiple Licensing of Land Mobile Radio
Systems ("Community Repeaters") in the Bands 806-812 and 851-866
MHz, 71 F.C.C.2d 1391, 1392 (1979). In this case, Gem is an
unlicensed third party which manages the system for the other li-
censed users, providing use of the repeater to a limited number
of licensed mobile radio operators, based on the finite number of
available "slots."
Gem's president, Ross Beedle, testified that it operat-
ed the repeater to introduce itself--and its products and servic-
es--to mobile radio operators. He also testified that, during
the liability period, Gem charged the licensed operators only its
costs for the repeater (including cost of construction, mainte-
nance, and upkeep of the repeater facility), based on its belief
that federal law prohibited it from making a profit. See 47
C.F.R. 90.179 (1995). Gem charges its repeater customers a flat
monthly fee, which it characterizes as "tower rent."
From August 1985 to June 1989, Gem did not register
with the Department to collect, and did not collect, telecommuni-
cations excise taxes from its customers on revenues it received
from its paging, mobile telephone, or repeater businesses.
In the summer and fall of 1989, the Department audited
Gem for the period August 1, 1985, through June 30, 1990, and
concluded that Gem should have collected taxes based on those
businesses. In February 1990, the Department issued a determina-
tion of tax due and a notice of tax liability for the period
August 1985 through June 1989, reflecting a total tax liability
of $5,729.88, including penalties and interest. The Director of
the Department subsequently revised the assessment liability
period, thus reducing Gem's tax liability on the repeater busi-
ness to $969.20. Gem paid this amount under protest and sought
administrative review.
The Department held an administrative hearing in
September 1993, at which Gem conceded that it owed the tax on the
pager and mobile telephone services but contested its liability
for taxes on its community repeater receipts. Following the
hearing, the administrative law judge (ALJ) found that (1) Gem's
repeater functioned "to receive, process[,] and enhance radio
signals and then retransmit them to customers who receive the
strengthened signal"; and (2) Gem's customers had paid for the
repeater services, but Gem had not registered, filed returns, or
paid the taxes. Based on these findings, the ALJ concluded that
(1) the definition of "telecommunications" in section 2(c) of the
Telecommunications Act (35 ILCS 630/2(c) (West 1992)) was "suffi-
ciently comprehensive in its scope to encompass the radio repeat-
er operations that are the subject of this hearing"; (2) Gem was
a "retailer" responsible for collecting the tax based in part on
title 86, section 495.110 of the Illinois Administrative Code
(Code), which defines retailers as those who "provide radio
repeater services" (86 Ill. Adm. Code 495.110 (1996)); and (3)
Gem's charges to its customers were "gross charges," as defined
in section 2(a) of the Telecommunications Act (35 ILCS 630/2(a)
(West 1992)). The ALJ recommended that the Department uphold the
assessment against Gem.
In June 1994, the Department issued a decision adopting
the ALJ's recommendation, and Gem subsequently filed a complaint
for administrative review of the Department's decision. In
January 1996, the circuit court reversed the Department's deci-
sion, stating as follows:
"Statute does not identify community re-
peater services as being within the defini-
tion of the term 'telecommunications.' Since
the community repeater operations of Gem
Electronics plainly do not fall within the
definition of the term 'telecommunications,'
they do not fall within the term 'sale at
retail' and GEM Electronics is not a retail-
er. Therefore GEM Electronics is not re-
quired by [s]ection 5 of the [Telecommunica-
tions Act] to collect tax and remit it to the
Department. Gem Electronics owes no tax lia-
bility to the Department because Gem Elec-
tronics is not making 'sales at retail' by
supplying or furnishing telecommunications or
services and equipment in connections there-
with. Therefore, the decision of the Depart-
ment of Revenue is against the manifest
weight of the evidence and is accordingly
reversed."
II. ANALYSIS
The Telecommunications Act provides that the Depart-
ment's final administrative decisions are subject to judicial
review in accordance with the Administrative Review Law (Law)
(735 ILCS 5/3-101 et seq. (West 1992)). 35 ILCS 630/16 (West
1992). An administrative agency's decision may be reversed only
if it is legally erroneous or factually against the manifest
weight of the evidence. Thomas M. Madden & Co. v. Department of
Revenue, 272 Ill. App. 3d 212, 215, 651 N.E.2d 218, 219 (1995).
In the present case, no factual dispute exists. The
parties agree that Gem operated the community repeater, charged
its customers (hereinafter licensees) for using the community
repeater, and failed to collect taxes on those charges. Thus,
the only question before this court is whether receipts for use
of a community repeater are subject to taxation under the Tele-
communications Act. A determination of whether something is
subject to taxation pursuant to statute is solely a question of
law. Thomas M. Madden, 272 Ill. App. 3d at 215, 651 N.E.2d at
220.
Findings of an administrative agency on questions of
law are not binding on this court. DiFoggio v. Retirement Board
of the County Employees Annuity & Benefit Fund, 156 Ill. 2d 377,
381, 620 N.E.2d 1070, 1072 (1993). When the question raised on
review is purely legal, an agency's interpretation should receive
deference, but our review is de novo. Thomas M. Madden, 272 Ill.
App. 3d at 215, 651 N.E.2d at 220.
Taxing statutes are to be strictly construed and their
language is not to be extended or enlarged by implication beyond
its clear import. Van's Material Co. v. Department of Revenue,
131 Ill. 2d 196, 202, 545 N.E.2d 695, 698 (1989). In strictly
construing the provisions of the Telecommunications Act, our
primary concern is to ascertain and give effect to the legisla-
ture's intent. Van's Material, 131 Ill. 2d at 202, 545 N.E.2d at
698. The statutory language provides the best indicator of
legislative intent, and where that language is plain and unambig-
uous, courts must give it effect without considering other
indicia of legislative intent. Branson v. Department of Revenue,
168 Ill. 2d 247, 254, 659 N.E.2d 961, 965 (1995); First of
America Bank, Rockford, N.A. v. Netsch, 166 Ill. 2d 165, 181, 651 N.E.2d 1105, 1112 (1995).
Section 3 of the Telecommunications Act provides, in
part, as follows:
"A tax is imposed upon the act or privi-
lege of originating or receiving intrastate
telecommunications by a person in this State
at the rate of 5% of the gross charge for
such telecommunications purchased at retail
from a retailer by such person." (Emphasis
added.) 35 ILCS 630/3 (West 1992).
Section 5 of the Telecommunications Act provides in
part that the retailer shall collect the tax from the taxpayer
and remit it to the Department and the tax constitutes a debt the
retailer owes to the State. 35 ILCS 630/5 (West 1992).
Gem relies on Arenson v. Department of Revenue, 279
Ill. App. 3d 355, 359-60, 664 N.E.2d 1083, 1086-87 (1996), in
which the second district declined to apply the Telecommunica-
tions Act to repeater operations in part because it interpreted
section 3 of the Telecommunications Act as imposing the tax on
the repeater operator each time the repeater received or sent a
radio signal. Under this interpretation, the Arenson court
concluded that section 3 would tax the repeater operator twice--
each time a signal went through the repeater. The Second Dis-
trict Appellate Court concluded the legislature could not have
intended such a result. Accordingly, it held that the tax did
not apply to repeater operations. Arenson, 279 Ill. App. 3d at
359-60, 664 N.E.2d at 1086-87.
However, the language of sections 3 and 5 of the
Telecommunications Act plainly indicates that the tax is imposed
on the "act or privilege of" originating or receiving telecommu-
nications through a purchase at retail. 35 ILCS 630/3, 5 (West
1992). Section 3 states that the tax will be imposed, not on the
provider of repeater services, but on the purchaser of those
services--that is, the licensees--based on gross charges for such
purchases. The "retailer" is obligated only to collect the tax;
it is not the "taxpayer." Thus, we decline to follow Arenson.
Section 3 of the Telecommunications Act imposes three
requirements that must be met before the Department may require
Gem to collect the tax from licensees who use Gem's repeater: (1)
the licensees must originate or receive "telecommunications"; (2)
the licensees must "purchase[] at retail" those "telecommunica-
tions"; and (3) Gem must be a "retailer." 35 ILCS 630/3 (West
1992).
A. Do Licensees Originate or Receive "Telecommunications?"
Section 2(c) of the Telecommunications Act defines
"[t]elecommunications," in part, as follows:
"'Telecommunications,' in addition to
the meaning ordinarily and popularly ascribed
to it, includes, without limitation, messages
or information transmitted through use of
local, toll[,] and wide area telephone ser-
vice; private line services; channel servic-
es; telegraph services; teletypewriter; com-
puter exchange services; cellular mobile
telecommunications service; specialized mo-
bile radio; stationary two[-]way radio; pag-
ing service; or any other form of mobile and
portable one-way or two-way communications;
or any other transmission of messages or
information by electronic or similar means,
between or among points by wire, cable, fi-
ber-optics, laser, microwave, radio, satel-
lite or similar facilities." (Emphasis add-
ed.) 35 ILCS 630/2(c) (West 1992).
The definition of "telecommunications" expressly includes messag-
es or information transmitted through the use of stationary two-
way radio or any form of mobile and portable one-way or two-way
communications. Thus, Gem's licensees clearly are originating
and receiving "telecommunications."
Gem agrees that the messages between the radio opera-
tors constitute telecommunications. Nevertheless, it contends
that the tax does not apply in this case because repeater servic-
es do not constitute telecommunications. First, Gem invites this
court to affirm the circuit court's conclusion that Gem is not
subject to the tax because the definition of "telecommunications"
does not specifically include transmissions by "community repeat-
er." See Arenson, 279 Ill. App. 3d at 359, 664 N.E.2d at 1086.
We note, however, that the statutory definition of "telecommuni-
cations" is not exhaustive, as indicated by the phrase "includes,
without limitation," following the first clause of the defini-
tion. To accept Gem's interpretation would essentially render
that phrase meaningless.
The words "include" or "including" are ordinarily terms
of enlargement rather than restriction and indicate that items
enumerated in a statute are not meant to be exclusive. Paxson v.
Board of Education of School District No. 87, 276 Ill. App. 3d
912, 920, 658 N.E.2d 1309, 1314 (1995). Moreover, the statute's
specific enumeration is followed by the broadly inclusive phrase,
"or any other transmission of messages or information by elec-
tronic or similar means." 35 ILCS 630/2(c) (West 1992). Thus,
the mere fact that repeater services are not specifically listed
does not preclude them from constituting "telecommunications."
For purposes of determining whether repeater services
constitute "telecommunications" subject to the tax, the relevant
language of the definition of telecommunications is "transmission
of messages or information by electronic or similar means,
between or among points by *** radio *** or similar facilities."
35 ILCS 630/2(c) (West 1992). Gem contends that the community
repeater does not provide telecommunications because it does not
transmit messages. We are not persuaded.
Merriam-Webster's Collegiate Dictionary defines "trans-
mit" as "to send or convey from one person or place to another[;]
*** to send out (a signal) either by radio waves or over a wire."
Merriam-Webster's Collegiate Dictionary 1255 (10th ed. 1996).
The repeater does not originate messages; however, it receives a
message from the originator, strengthens it, and, in turn, sends
that message to its intended recipient using radio waves.
Moreover, Beedle testified that the "community repeater receives
and processes that signal [from mobile or base stations],
strengthens it[,] and then retransmits that signal." (Emphasis
added.) Beedle's testimony and the common understanding of a
repeater's function support the conclusion that a repeater
"transmits" messages or information through the use of radio
facilities--that is, it provides telecommunication services.
Furthermore, both parties agree that the communications
between the licensees--the originators and intended receivers of
the radio messages--constitute telecommunications. It strains
logic to conclude that the nature of those signals changes during
the time the repeater receives and retransmits them. Common
sense indicates that the repeater is a radio facility that
transmits "telecommunications"; without it, Gem concedes, the
communication of a message from the originator to a distant
receiver would fail.
Section 2(c) of the Telecommunications Act defines
"telecommunications" broadly and expressly includes transmissions
between two-way radio operators. A community repeater receives,
strengthens, and transmits those telecommunications. According-
ly, we hold that section 2(c) of the Telecommunications Act is
sufficiently broad to encompass community repeater services.
B. Do Licensees Make "Purchases at Retail"?
Section 2(j) of the Telecommunications Act defines
"[p]urchase at retail" as "the acquisition, consumption[,] or use
of telecommunication through a sale at retail." 35 ILCS 630/2(j)
(West 1992). The Department contends that Gem's charges to
licensees constitute purchases at retail. We agree.
Gem first contends that the licensees are not making
"purchases at retail" pursuant to section 2(j) of the Telecommu-
nications Act based on its assumption that repeater services do
not involve telecommunications. Because we have rejected that
assumption, we need not address this argument.
Gem next contends that the licensees are not making
"purchases at retail" because no "sales at retail" have occurred.
Section 2(k) of the Telecommunications Act defines "[s]ale at
retail," in part, as follows:
"'Sale at retail' means the transmit-
ting, supplying[,] or furnishing of telecom-
munications and all services and equipment
provided in connection therewith for a con-
sideration ***." 35 ILCS 630/2(k) (West
1992).
The Department contends that Gem's repeater services
enable two-way radio operators to send and receive messages, thus
it is furnishing telecommunications-related services. Gem charg-
es for the repeater service, therefore it is making "sale[s] at
retail."
Gem responds that its charges to licensees do not
constitute "sale[s] at retail" because the statute requires both
the transmitting, supplying, or furnishing of telecommunications
and services and equipment provided in connection therewith, and
Gem is not doing both. This contention is based in part on Gem's
belief that it "provides no telecommunications in the first
place"; therefore, it does not provide any services or equipment
in connection with such telecommunications, as the statutory
definition of "sale at retail" requires. 35 ILCS 630/2(k) (West
1992).
We note again that we have rejected Gem's assumption
that repeater services do not involve telecommunications.
Furthermore, the word "and" in the definition of "sale at retail"
does not act as a conjunctive; rather the phrase "and all servic-
es and equipment provided in connection therewith" merely expands
the meaning of the first phrase. 35 ILCS 630/2(k) (West 1992).
That is, one cannot supply, furnish, or transmit telecommunica-
tions without providing some kind of telecommunications service
or equipment.
Accordingly, we conclude that Gem's provision of
repeater services to a licensee in exchange for a monthly charge
constitutes a "sale at retail" pursuant to the Telecommunications
Act. As a result of such a sale at retail, Gem provides repeater
service to transmit a licensee's message to a distant recipient.
Thus, the two-way radio operators are making "purchases at
retail" because the repeater enables them to "consume" or "use"
telecommunications.
C. Is Gem a "Retailer"?
Section 2(l) of the Telecommunications Act defines "re-
tailer", in part, as follows: "'Retailer' means and includes
every person engaged in the business of making sales at retail as
defined in this Article." 35 ILCS 630/2(l) (West 1992).
The Department contends that Gem is a "retailer"
because it makes sales at retail by charging its customers for
repeater services which involve transmitting, supplying, or fur-
nishing telecommunications. Gem responds that it is not a
"retailer" because (1) it is not "engaged in the business of"
making sales at retail, (2) it made no profit on the repeater
business, and (3) repeater services do not constitute "telecommu-
nications." We agree with the Department.
Gem relies on two cases, Valier Coal Co. v. Department
of Revenue, 11 Ill. 2d 402, 143 N.E.2d 35 (1957), and Phillips v.
Illinois Bell Telephone Co., 34 Ill. 2d 234, 215 N.E.2d 264
(1966), to support its contention that it is not "in the business
of" making sales at retail. In Valier, a coal company was
required to obtain the approval of the Illinois Public Utilities
Commission before it could sell coal to its parent corporation, a
railroad. The Illinois Public Utilities Commission granted
approval on the condition that the coal company sell the coal at
cost and exclusively to the railroad. The Department tried to
impose the retailer's occupation tax on the coal company's sale
of coal based on the company's being "engaged in business," but
the supreme court held that such a tax was improper because the
right to make a profit and to sell to the general public are
ordinary incidents of being engaged in business. Valier, 11 Ill. 2d at 409-10, 143 N.E.2d at 39.
Gem's contention that both rights delineated in Valier
are absent in this case is unpersuasive. First, Gem contends the
government prohibited it from making a profit on its community
repeater system during the 1988-89 audit period based on title
47, section 90.179 of the Communications Act of 1934 (Communica-
tions Act) (47 C.F.R. 90.179 (1995)). However, the Department
points out that section 90.179 of the Communications Act was
amended prior to the audit period to allow nonlicensed repeater
operators to operate the station "either on a non-profit cost
shared basis or on a for-profit private carrier basis." 47
C.F.R. 90.179 (1995). Thus, it appears that the FCC did not
prohibit Gem from making a profit on its repeater operations.
Next, Gem contends that the government limits to whom
it can sell the repeater services by requiring users to be
licensed. This, too, is unpersuasive. The only limitation
arises from the nature of the repeater itself, which can accommo-
date a finite number of signals. Thus, Valier fails to support
Gem's contention that it is not "engaged in the business of"
making sales at retail.
Gem relies on Phillips to support its contention that
the factors exempting hotels from tax liability also exist here.
Specifically, Gem contends that (1) it does not own the mobile
radios used by licensees to transmit and receive messages, (2)
federal law prohibited it from selling a communications service
in connection with its community repeater during the period of
the audit, and (3) the licensees, rather than Gem, have a duty to
repair, inspect, and maintain the communications equipment.
In Phillips, an Illinois Bell shareholder filed a com-
plaint seeking to enjoin the company from paying a tax under the
Messages Tax Act (Ill. Rev. Stat. 1961, ch. 120, pars. 467.1
through 467.15) (the predecessor to the Telecommunications Act)
on the transmission of messages by customers of hotels, hospi-
tals, clubs, and similar organizations which operate their own
switchboards. The plaintiff in Phillips argued that Illinois
Bell was exempt from the tax on the transactions in question
because the hotels were reselling the telephone service. Thus,
they were in the business of transmitting messages under the
Messages Tax Act.
The supreme court concluded that Illinois Bell, rather
than the private organizations, was in the business of transmit-
ting messages (and therefore liable for the tax), based on three
factors: (1) ownership of equipment; (2) freedom to resell the
service; and (3) duty to maintain the equipment. In Phillips,
Illinois Bell owned the equipment leading to the organization's
premises and all equipment on the hotel premises; the hotel was
prohibited from reselling the telephone service; and Bell had the
duty to repair, inspect, and maintain the communications equip-
ment.
Although Phillips is a Messages Tax Act case, its
analysis proves useful in determining whether Gem is "engaged in
the business of" making sales at retail in the present case.
With regard to each of the above factors, we note first that
while Gem does not own the mobile radios used by licensees, it
does own the repeater itself--the subject of this litigation.
Second, Gem claims that federal law prohibited it from selling a
communications service based on Multiple Licensing-Safety and
Special Radio Service, 24 F.C.C.2d 510, 519 (1970), which prohib-
ited the sale of "packaged" services that include dispatching as
well as facility rental. This case is inapposite; Gem did not
seek to sell packaged services nor does the government limit
Gem's rental of repeater slots. Although Gem provides repeater
service to a limited number of customers, the number of slots--
not the government--limits its market.
Finally, we consider the question of who operates,
controls, and maintains the community repeater. Federal regula-
tions support Gem's contention that it has no control over the
repeater. According to regulations, the licensees operate the
repeater (47 U.S.C 318 (1994)); control the frequencies; and
have a duty to repair, inspect, and maintain the communications
equipment (47 C.F.R. 90.441) (1995). However, this regulatory
control appears to be a fiction. In Land Mobile Radio Systems,
71 F.C.C.2d at 1399, the FCC stated:
"A basic principle in the administration
of the private services is that the licensee
is responsible for the operation of its sys-
tem. The licensees of a typical community
repeater, however, have virtually no control
over the mobile relay facilities for which
they are licensed. Access to equipment,
frequently, is restricted by tight security
in high rise buildings or is limited by re-
mote mountain locations. As a practical
matter, the licensee is being held responsi-
ble for a system that it knows very little
about." (Emphasis added.)
Thus, it appears that Gem controls the repeater, although neither
party presented evidence on who actually operates, controls, and
maintains the repeater.
Considering the three Phillips factors, the evidence
supports a determination that Gem is engaged in the business of
making sales at retail. It owns the repeater, which it makes
available to radio operators for a consideration, and it provides
the radio operators with telecommunications-related services.
Thus, Gem is a retailer under the Telecommunications Act.
Our analysis shows that all the requirements of section
3 of the Telecommunications Act apply in this case. Two-way
radio communications constitute "telecommunications" pursuant to
the Telecommunications Act. Gem's customers originate these
telecommunications and Gem's community repeater receives,
strengthens, and retransmits them. Without the community repeat-
er, customers would not receive the messages. Because the
repeater enables Gem's customers to receive telecommunications,
Gem is supplying telecommunications-related services. Gem's
customers are paying for the privilege of receiving telecommuni-
cations. Therefore, Gem is making sales at retail and it is a
retailer under the Telecommunications Act. Because section 5 of
the Act imposes a duty on retailers to collect the tax from its
customers, Gem is liable for the tax it should have collected.
Accordingly, we reverse the circuit court's decision finding that
Gem has no liability under the Telecommunications Act.
E. Attorney Fees
Gem cross-appealed, seeking an award of reasonable
attorney fees and expenses under section 10-55(c) of the Illinois
Administrative Procedure Act (5 ILCS 100/10-55(c) (West 1992)),
on the ground that the Department exceeded its statutory authori-
ty by adopting an administrative rule that the Telecommunications
Act does not authorize. Gem reasons that the Department exceeded
its statutory authority when it promulgated section 495.110 of
the Department's rules, which provides as follows:
"Retailers of telecommunications are
persons who engage in the business of making
sales of telecommunications at retail. This
includes retailers who operate or provide
radio repeater services, paging services,
facsimile transmission services[,] and party
line services. Hotels and other traffic
aggregators who sell telecommunications to
guests or other persons at retail are retail-
ers of telecommunications." (Emphasis add-
ed.) 86 Ill. Adm. Code 495.110 (1996).
Because we hold that the Telecommunications Act applies to
repeater services, we deny Gem's request for attorney fees.
III. CONCLUSION
For the reasons stated, we reverse the circuit court's
judgment finding that the Telecommunications Act tax does not
apply to Gem's repeater services, and we deny Gem's request for
attorney fees.
Reversed.
GARMAN and KNECHT, JJ., concur.
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
GEM ELECTRONICS OF MONMOUTH, INC., ) Appeal from
Plaintiff-Appellee and ) Circuit Court of
Cross-Appellant, ) Sangamon County
v. ) No. 94MR0253
THE DEPARTMENT OF REVENUE, )
Defendant-Appellant and ) Honorable
Cross-Appellee. ) Donald M. Cadigan,
) Judge Presiding.
_________________________________________________________________
PRESIDING JUSTICE STEIGMANN delivered the opinion of
the court:
In February 1990, plaintiff, the Illinois Department of
Revenue (Department), assessed taxes on defendant, Gem Elec-
tronics of Monmouth, Inc. (Gem), under the Telecommunications
Excise Tax Act (Telecommunications Act) (35 ILCS 630/1 through 21
(West 1992)). Gem contested the taxes, and the Department
conducted an administrative hearing in September 1993. In June
1994, the Department issued a decision upholding the assessment.
In August 1994, Gem filed a complaint seeking adminis-
trative review of the Department's decision, and in January 1996,
the circuit court reversed the Department's decision. The
Department appeals, arguing that the court erred because (1)
Gem's customers originate and receive "telecommunications;" and,
therefore, (2) Gem is a "retailer" pursuant to the Telecommunica-
tions Act. We agree with the Department and reverse.
I. BACKGROUND
Gem has been engaged in electronic sales and service in
Monmouth, Illinois, since 1976. As part of its business, Gem
sells, maintains, and repairs mobile radio equipment, including
mobile units and base stations, operates paging and mobile
telephone services, and operates a "community repeater" business.
A "repeater" is a device used in connection with two-
way radio communication. Two-way radios, typically made up of a
base station and mobile units, originate and receive messages on
the FM band. However, they generate a relatively weak signal
with a limited range. The repeater is an unattended mobile relay
station which receives a signal generated by a two-way radio,
processes it, strengthens it, and then retransmits it, allowing a
distant two-way radio to receive the signal.
A "community repeater" is one type of shared mobile
radio system. Shared systems "involve either an arrangement
where the licensee offers excess capacity to unlicensed eligible
users or where each user of the licensed facilities is individu-
ally licensed." In re Implementation of Sections 3(n) and 332 of
the Communications Act Regulatory Treatment of Mobile Services, 8
F.C.C. Rec. 7988, 7990 n.12 (1993). The latter arrangement is
called a "multiple-licensed system." Multiple-licensed systems
may be either nonprofit cooperatives or "community repeaters,"
where one of the system licensees or an unlicensed third party
manages the system for the other licensed users. Implementation,
8 F.C.C. Rec. at 7990 n.12.
The Federal Communications Commission (FCC) does not
license the repeater itself, nor does the FCC license repeater
operators who are not themselves mobile radio operators. In-
stead, the FCC requires the individual mobile radio operators to
hold licenses to operate on designated frequencies. The communi-
ty repeater is licensed to those individual operators. In re An
Inquiry Concerning the Multiple Licensing of Land Mobile Radio
Systems ("Community Repeaters") in the Bands 806-812 and 851-866
MHz, 71 F.C.C.2d 1391, 1392 (1979). In this case, Gem is an
unlicensed third party which manages the system for the other li-
censed users, providing use of the repeater to a limited number
of licensed mobile radio operators, based on the finite number of
available "slots."
Gem's president, Ross Beedle, testified that it operat-
ed the repeater to introduce itself--and its products and servic-
es--to mobile radio operators. He also testified that, during
the liability period, Gem charged the licensed operators only its
costs for the repeater (including cost of construction, mainte-
nance, and upkeep of the repeater facility), based on its belief
that federal law prohibited it from making a profit. See 47
C.F.R. 90.179 (1995). Gem charges its repeater customers a flat
monthly fee, which it characterizes as "tower rent."
From August 1985 to June 1989, Gem did not register
with the Department to collect, and did not collect, telecommuni-
cations excise taxes from its customers on revenues it received
from its paging, mobile telephone, or repeater businesses.
In the summer and fall of 1989, the Department audited
Gem for the period August 1, 1985, through June 30, 1990, and
concluded that Gem should have collected taxes based on those
businesses. In February 1990, the Department issued a determina-
tion of tax due and a notice of tax liability for the period
August 1985 through June 1989, reflecting a total tax liability
of $5,729.88, including penalties and interest. The Director of
the Department subsequently revised the assessment liability
period, thus reducing Gem's tax liability on the repeater busi-
ness to $969.20. Gem paid this amount under protest and sought
administrative review.
The Department held an administrative hearing in
September 1993, at which Gem conceded that it owed the tax on the
pager and mobile telephone services but contested its liability
for taxes on its community repeater receipts. Following the
hearing, the administrative law judge (ALJ) found that (1) Gem's
repeater functioned "to receive, process[,] and enhance radio
signals and then retransmit them to customers who receive the
strengthened signal"; and (2) Gem's customers had paid for the
repeater services, but Gem had not registered, filed returns, or
paid the taxes. Based on these findings, the ALJ concluded that
(1) the definition of "telecommunications" in section 2(c) of the
Telecommunications Act (35 ILCS 630/2(c) (West 1992)) was "suffi-
ciently comprehensive in its scope to encompass the radio repeat-
er operations that are the subject of this hearing"; (2) Gem was
a "retailer" responsible for collecting the tax based in part on
title 86, section 495.110 of the Illinois Administrative Code
(Code), which defines retailers as those who "provide radio
repeater services" (86 Ill. Adm. Code 495.110 (1996)); and (3)
Gem's charges to its customers were "gross charges," as defined
in section 2(a) of the Telecommunications Act (35 ILCS 630/2(a)
(West 1992)). The ALJ recommended that the Department uphold the
assessment against Gem.
In June 1994, the Department issued a decision adopting
the ALJ's recommendation, and Gem subsequently filed a complaint
for administrative review of the Department's decision. In
January 1996, the circuit court reversed the Department's deci-
sion, stating as follows:
"Statute does not identify community re-
peater services as being within the defini-
tion of the term 'telecommunications.' Since
the community repeater operations of Gem
Electronics plainly do not fall within the
definition of the term 'telecommunications,'
they do not fall within the term 'sale at
retail' and GEM Electronics is not a retail-
er. Therefore GEM Electronics is not re-
quired by [s]ection 5 of the [Telecommunica-
tions Act] to collect tax and remit it to the
Department. Gem Electronics owes no tax lia-
bility to the Department because Gem Elec-
tronics is not making 'sales at retail' by
supplying or furnishing telecommunications or
services and equipment in connections there-
with. Therefore, the decision of the Depart-
ment of Revenue is against the manifest
weight of the evidence and is accordingly
reversed."
II. ANALYSIS
The Telecommunications Act provides that the Depart-
ment's final administrative decisions are subject to judicial
review in accordance with the Administrative Review Law (Law)
(735 ILCS 5/3-101 et seq. (West 1992)). 35 ILCS 630/16 (West
1992). An administrative agency's decision may be reversed only
if it is legally erroneous or factually against the manifest
weight of the evidence. Thomas M. Madden & Co. v. Department of
Revenue, 272 Ill. App. 3d 212, 215, 651 N.E.2d 218, 219 (1995).
In the present case, no factual dispute exists. The
parties agree that Gem operated the community repeater, charged
its customers (hereinafter licensees) for using the community
repeater, and failed to collect taxes on those charges. Thus,
the only question before this court is whether receipts for use
of a community repeater are subject to taxation under the Tele-
communications Act. A determination of whether something is
subject to taxation pursuant to statute is solely a question of
law. Thomas M. Madden, 272 Ill. App. 3d at 215, 651 N.E.2d at
220.
Findings of an administrative agency on questions of
law are not binding on this court. DiFoggio v. Retirement Board
of the County Employees Annuity & Benefit Fund, 156 Ill. 2d 377,
381, 620 N.E.2d 1070, 1072 (1993). When the question raised on
review is purely legal, an agency's interpretation should receive
deference, but our review is de novo. Thomas M. Madden, 272 Ill.
App. 3d at 215, 651 N.E.2d at 220.
Taxing statutes are to be strictly construed and their
language is not to be extended or enlarged by implication beyond
its clear import. Van's Material Co. v. Department of Revenue,
131 Ill. 2d 196, 202, 545 N.E.2d 695, 698 (1989). In strictly
construing the provisions of the Telecommunications Act, our
primary concern is to ascertain and give effect to the legisla-
ture's intent. Van's Material, 131 Ill. 2d at 202, 545 N.E.2d at
698. The statutory language provides the best indicator of
legislative intent, and where that language is plain and unambig-
uous, courts must give it effect without considering other
indicia of legislative intent. Branson v. Department of Revenue,
168 Ill. 2d 247, 254, 659 N.E.2d 961, 965 (1995); First of
America Bank, Rockford, N.A. v. Netsch, 166 Ill. 2d 165, 181, 651 N.E.2d 1105, 1112 (1995).
Section 3 of the Telecommunications Act provides, in
part, as follows:
"A tax is imposed upon the act or privi-
lege of originating or receiving intrastate
telecommunications by a person in this State
at the rate of 5% of the gross charge for
such telecommunications purchased at retail
from a retailer by such person." (Emphasis
added.) 35 ILCS 630/3 (West 1992).
Section 5 of the Telecommunications Act provides in
part that the retailer shall collect the tax from the taxpayer
and remit it to the Department and the tax constitutes a debt the
retailer owes to the State. 35 ILCS 630/5 (West 1992).
Gem relies on Arenson v. Department of Revenue, 279
Ill. App. 3d 355, 359-60, 664 N.E.2d 1083, 1086-87 (1996), in
which the second district declined to apply the Telecommunica-
tions Act to repeater operations in part because it interpreted
section 3 of the Telecommunications Act as imposing the tax on
the repeater operator each time the repeater received or sent a
radio signal. Under this interpretation, the Arenson court
concluded that section 3 would tax the repeater operator twice--
each time a signal went through the repeater. The Second Dis-
trict Appellate Court concluded the legislature could not have
intended such a result. Accordingly, it held that the tax did
not apply to repeater operations. Arenson, 279 Ill. App. 3d at
359-60, 664 N.E.2d at 1086-87.
However, the language of sections 3 and 5 of the
Telecommunications Act plainly indicates that the tax is imposed
on the "act or privilege of" originating or receiving telecommu-
nications through a purchase at retail. 35 ILCS 630/3, 5 (West
1992). Section 3 states that the tax will be imposed, not on the
provider of repeater services, but on the purchaser of those
services--that is, the licensees--based on gross charges for such
purchases. The "retailer" is obligated only to collect the tax;
it is not the "taxpayer." Thus, we decline to follow Arenson.
Section 3 of the Telecommunications Act imposes three
requirements that must be met before the Department may require
Gem to collect the tax from licensees who use Gem's repeater: (1)
the licensees must originate or receive "telecommunications"; (2)
the licensees must "purchase[] at retail" those "telecommunica-
tions"; and (3) Gem must be a "retailer." 35 ILCS 630/3 (West
1992).
A. Do Licensees Originate or Receive "Telecommunications?"
Section 2(c) of the Telecommunications Act defines
"[t]elecommunications," in part, as follows:
"'Telecommunications,' in addition to
the meaning ordinarily and popularly ascribed
to it, includes, without limitation, messages
or information transmitted through use of
local, toll[,] and wide area telephone ser-
vice; private line services; channel servic-
es; telegraph services; teletypewriter; com-
puter exchange services; cellular mobile
telecommunications service; specialized mo-
bile radio; stationary two[-]way radio; pag-
ing service; or any other form of mobile and
portable one-way or two-way communications;
or any other transmission of messages or
information by electronic or similar means,
between or among points by wire, cable, fi-
ber-optics, laser, microwave, radio, satel-
lite or similar facilities." (Emphasis add-
ed.) 35 ILCS 630/2(c) (West 1992).
The definition of "telecommunications" expressly includes messag-
es or information transmitted through the use of stationary two-
way radio or any form of mobile and portable one-way or two-way
communications. Thus, Gem's licensees clearly are originating
and receiving "telecommunications."
Gem agrees that the messages between the radio opera-
tors constitute telecommunications. Nevertheless, it contends
that the tax does not apply in this case because repeater servic-
es do not constitute telecommunications. First, Gem invites this
court to affirm the circuit court's conclusion that Gem is not
subject to the tax because the definition of "telecommunications"
does not specifically include transmissions by "community repeat-
er." See Arenson, 279 Ill. App. 3d at 359, 664 N.E.2d at 1086.
We note, however, that the statutory definition of "telecommuni-
cations" is not exhaustive, as indicated by the phrase "includes,
without limitation," following the first clause of the defini-
tion. To accept Gem's interpretation would essentially render
that phrase meaningless.
The words "include" or "including" are ordinarily terms
of enlargement rather than restriction and indicate that items
enumerated in a statute are not meant to be exclusive. Paxson v.
Board of Education of School District No. 87, 276 Ill. App. 3d
912, 920, 658 N.E.2d 1309, 1314 (1995). Moreover, the statute's
specific enumeration is followed by the broadly inclusive phrase,
"or any other transmission of messages or information by elec-
tronic or similar means." 35 ILCS 630/2(c) (West 1992). Thus,
the mere fact that repeater services are not specifically listed
does not preclude them from constituting "telecommunications."
For purposes of determining whether repeater services
constitute "telecommunications" subject to the tax, the relevant
language of the definition of telecommunications is "transmission
of messages or information by electronic or similar means,
between or among points by *** radio *** or similar facilities."
35 ILCS 630/2(c) (West 1992). Gem contends that the community
repeater does not provide telecommunications because it does not
transmit messages. We are not persuaded.
Merriam-Webster's Collegiate Dictionary defines "trans-
mit" as "to send or convey from one person or place to another[;]
*** to send out (a signal) either by radio waves or over a wire."
Merriam-Webster's Collegiate Dictionary 1255 (10th ed. 1996).
The repeater does not originate messages; however, it receives a
message from the originator, strengthens it, and, in turn, sends
that message to its intended recipient using radio waves.
Moreover, Beedle testified that the "community repeater receives
and processes that signal [from mobile or base stations],
strengthens it[,] and then retransmits that signal." (Emphasis
added.) Beedle's testimony and the common understanding of a
repeater's function support the conclusion that a repeater
"transmits" messages or information through the use of radio
facilities--that is, it provides telecommunication services.
Furthermore, both parties agree that the communications
between the licensees--the originators and intended receivers of
the radio messages--constitute telecommunications. It strains
logic to conclude that the nature of those signals changes during
the time the repeater receives and retransmits them. Common
sense indicates that the repeater is a radio facility that
transmits "telecommunications"; without it, Gem concedes, the
communication of a message from the originator to a distant
receiver would fail.
Section 2(c) of the Telecommunications Act defines
"telecommunications" broadly and expressly includes transmissions
between two-way radio operators. A community repeater receives,
strengthens, and transmits those telecommunications. According-
ly, we hold that section 2(c) of the Telecommunications Act is
sufficiently broad to encompass community repeater services.
B. Do Licensees Make "Purchases at Retail"?
Section 2(j) of the Telecommunications Act defines
"[p]urchase at retail" as "the acquisition, consumption[,] or use
of telecommunication through a sale at retail." 35 ILCS 630/2(j)
(West 1992). The Department contends that Gem's charges to
licensees constitute purchases at retail. We agree.
Gem first contends that the licensees are not making
"purchases at retail" pursuant to section 2(j) of the Telecommu-
nications Act based on its assumption that repeater services do
not involve telecommunications. Because we have rejected that
assumption, we need not address this argument.
Gem next contends that the licensees are not making
"purchases at retail" because no "sales at retail" have occurred.
Section 2(k) of the Telecommunications Act defines "[s]ale at
retail," in part, as follows:
"'Sale at retail' means the transmit-
ting, supplying[,] or furnishing of telecom-
munications and all services and equipment
provided in connection therewith for a con-
sideration ***." 35 ILCS 630/2(k) (West
1992).
The Department contends that Gem's repeater services
enable two-way radio operators to send and receive messages, thus
it is furnishing telecommunications-related services. Gem charg-
es for the repeater service, therefore it is making "sale[s] at
retail."
Gem responds that its charges to licensees do not
constitute "sale[s] at retail" because the statute requires both
the transmitting, supplying, or furnishing of telecommunications
and services and equipment provided in connection therewith, and
Gem is not doing both. This contention is based in part on Gem's
belief that it "provides no telecommunications in the first
place"; therefore, it does not provide any services or equipment
in connection with such telecommunications, as the statutory
definition of "sale at retail" requires. 35 ILCS 630/2(k) (West
1992).
We note again that we have rejected Gem's assumption
that repeater services do not involve telecommunications.
Furthermore, the word "and" in the definition of "sale at retail"
does not act as a conjunctive; rather the phrase "and all servic-
es and equipment provided in connection therewith" merely expands
the meaning of the first phrase. 35 ILCS 630/2(k) (West 1992).
That is, one cannot supply, furnish, or transmit telecommunica-
tions without providing some kind of telecommunications service
or equipment.
Accordingly, we conclude that Gem's provision of
repeater services to a licensee in exchange for a monthly charge
constitutes a "sale at retail" pursuant to the Telecommunications
Act. As a result of such a sale at retail, Gem provides repeater
service to transmit a licensee's message to a distant recipient.
Thus, the two-way radio operators are making "purchases at
retail" because the repeater enables them to "consume" or "use"
telecommunications.
C. Is Gem a "Retailer"?
Section 2(l) of the Telecommunications Act defines "re-
tailer", in part, as follows: "'Retailer' means and includes
every person engaged in the business of making sales at retail as
defined in this Article." 35 ILCS 630/2(l) (West 1992).
The Department contends that Gem is a "retailer"
because it makes sales at retail by charging its customers for
repeater services which involve transmitting, supplying, or fur-
nishing telecommunications. Gem responds that it is not a
"retailer" because (1) it is not "engaged in the business of"
making sales at retail, (2) it made no profit on the repeater
business, and (3) repeater services do not constitute "telecommu-
nications." We agree with the Department.
Gem relies on two cases, Valier Coal Co. v. Department
of Revenue, 11 Ill. 2d 402, 143 N.E.2d 35 (1957), and Phillips v.
Illinois Bell Telephone Co., 34 Ill. 2d 234, 215 N.E.2d 264
(1966), to support its contention that it is not "in the business
of" making sales at retail. In Valier, a coal company was
required to obtain the approval of the Illinois Public Utilities
Commission before it could sell coal to its parent corporation, a
railroad. The Illinois Public Utilities Commission granted
approval on the condition that the coal company sell the coal at
cost and exclusively to the railroad. The Department tried to
impose the retailer's occupation tax on the coal company's sale
of coal based on the company's being "engaged in business," but
the supreme court held that such a tax was improper because the
right to make a profit and to sell to the general public are
ordinary incidents of being engaged in business. Valier, 11 Ill. 2d at 409-10, 143 N.E.2d at 39.
Gem's contention that both rights delineated in Valier
are absent in this case is unpersuasive. First, Gem contends the
government prohibited it from making a profit on its community
repeater system during the 1988-89 audit period based on title
47, section 90.179 of the Communications Act of 1934 (Communica-
tions Act) (47 C.F.R. 90.179 (1995)). However, the Department
points out that section 90.179 of the Communications Act was
amended prior to the audit period to allow nonlicensed repeater
operators to operate the station "either on a non-profit cost
shared basis or on a for-profit private carrier basis." 47
C.F.R. 90.179 (1995). Thus, it appears that the FCC did not
prohibit Gem from making a profit on its repeater operations.
Next, Gem contends that the government limits to whom
it can sell the repeater services by requiring users to be
licensed. This, too, is unpersuasive. The only limitation
arises from the nature of the repeater itself, which can accommo-
date a finite number of signals. Thus, Valier fails to support
Gem's contention that it is not "engaged in the business of"
making sales at retail.
Gem relies on Phillips to support its contention that
the factors exempting hotels from tax liability also exist here.
Specifically, Gem contends that (1) it does not own the mobile
radios used by licensees to transmit and receive messages, (2)
federal law prohibited it from selling a communications service
in connection with its community repeater during the period of
the audit, and (3) the licensees, rather than Gem, have a duty to
repair, inspect, and maintain the communications equipment.
In Phillips, an Illinois Bell shareholder filed a com-
plaint seeking to enjoin the company from paying a tax under the
Messages Tax Act (Ill. Rev. Stat. 1961, ch. 120, pars. 467.1
through 467.15) (the predecessor to the Telecommunications Act)
on the transmission of messages by customers of hotels, hospi-
tals, clubs, and similar organizations which operate their own
switchboards. The plaintiff in Phillips argued that Illinois
Bell was exempt from the tax on the transactions in question
because the hotels were reselling the telephone service. Thus,
they were in the business of transmitting messages under the
Messages Tax Act.
The supreme court concluded that Illinois Bell, rather
than the private organizations, was in the business of transmit-
ting messages (and therefore liable for the tax), based on three
factors: (1) ownership of equipment; (2) freedom to resell the
service; and (3) duty to maintain the equipment. In Phillips,
Illinois Bell owned the equipment leading to the organization's
premises and all equipment on the hotel premises; the hotel was
prohibited from reselling the telephone service; and Bell had the
duty to repair, inspect, and maintain the communications equip-
ment.
Although Phillips is a Messages Tax Act case, its
analysis proves useful in determining whether Gem is "engaged in
the business of" making sales at retail in the present case.
With regard to each of the above factors, we note first that
while Gem does not own the mobile radios used by licensees, it
does own the repeater itself--the subject of this litigation.
Second, Gem claims that federal law prohibited it from selling a
communications service based on Multiple Licensing-Safety and
Special Radio Service, 24 F.C.C.2d 510, 519 (1970), which prohib-
ited the sale of "packaged" services that include dispatching as
well as facility rental. This case is inapposite; Gem did not
seek to sell packaged services nor does the government limit
Gem's rental of repeater slots. Although Gem provides repeater
service to a limited number of customers, the number of slots--
not the government--limits its market.
Finally, we consider the question of who operates,
controls, and maintains the community repeater. Federal regula-
tions support Gem's contention that it has no control over the
repeater. According to regulations, the licensees operate the
repeater (47 U.S.C 318 (1994)); control the frequencies; and
have a duty to repair, inspect, and maintain the communications
equipment (47 C.F.R. 90.441) (1995). However, this regulatory
control appears to be a fiction. In Land Mobile Radio Systems,
71 F.C.C.2d at 1399, the FCC stated:
"A basic principle in the administration
of the private services is that the licensee
is responsible for the operation of its sys-
tem. The licensees of a typical community
repeater, however, have virtually no control
over the mobile relay facilities for which
they are licensed. Access to equipment,
frequently, is restricted by tight security
in high rise buildings or is limited by re-
mote mountain locations. As a practical
matter, the licensee is being held responsi-
ble for a system that it knows very little
about." (Emphasis added.)
Thus, it appears that Gem controls the repeater, although neither
party presented evidence on who actually operates, controls, and
maintains the repeater.
Considering the three Phillips factors, the evidence
supports a determination that Gem is engaged in the business of
making sales at retail. It owns the repeater, which it makes
available to radio operators for a consideration, and it provides
the radio operators with telecommunications-related services.
Thus, Gem is a retailer under the Telecommunications Act.
Our analysis shows that all the requirements of section
3 of the Telecommunications Act apply in this case. Two-way
radio communications constitute "telecommunications" pursuant to
the Telecommunications Act. Gem's customers originate these
telecommunications and Gem's community repeater receives,
strengthens, and retransmits them. Without the community repeat-
er, customers would not receive the messages. Because the
repeater enables Gem's customers to receive telecommunications,
Gem is supplying telecommunications-related services. Gem's
customers are paying for the privilege of receiving telecommuni-
cations. Therefore, Gem is making sales at retail and it is a
retailer under the Telecommunications Act. Because section 5 of
the Act imposes a duty on retailers to collect the tax from its
customers, Gem is liable for the tax it should have collected.
Accordingly, we reverse the circuit court's decision finding that
Gem has no liability under the Telecommunications Act.
E. Attorney Fees
Gem cross-appealed, seeking an award of reasonable
attorney fees and expenses under section 10-55(c) of the Illinois
Administrative Procedure Act (5 ILCS 100/10-55(c) (West 1992)),
on the ground that the Department exceeded its statutory authori-
ty by adopting an administrative rule that the Telecommunications
Act does not authorize. Gem reasons that the Department exceeded
its statutory authority when it promulgated section 495.110 of
the Department's rules, which provides as follows:
"Retailers of telecommunications are
persons who engage in the business of making
sales of telecommunications at retail. This
includes retailers who operate or provide
radio repeater services, paging services,
facsimile transmission services[,] and party
line services. Hotels and other traffic
aggregators who sell telecommunications to
guests or other persons at retail are retail-
ers of telecommunications." (Emphasis add-
ed.) 86 Ill. Adm. Code 495.110 (1996).
Because we hold that the Telecommunications Act applies to
repeater services, we deny Gem's request for attorney fees.
III. CONCLUSION
For the reasons stated, we reverse the circuit court's
judgment finding that the Telecommunications Act tax does not
apply to Gem's repeater services, and we deny Gem's request for
attorney fees.
Reversed.
GARMAN and KNECHT, JJ., concur.
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