Hartney Fuel Oil Company v. HamerAnnotate this Case
Plaintiff, Hartney Fuel Oil Company, is a retailer of fuel oil with a home office in Forest View, in Cook County. During the tax period in question, January 1, 2005, to June 30, 2007, Hartney accepted purchase orders in the Village of Mark, in Putnam County, through a local business with which it contracted. No Hartney employees were involved there. By structuring its sales in this way, Hartney avoided liability for the retail occupation taxes of Cook County, the Village of Forest View, and the Regional Transportation Authority. Hartney’s interpretation of the law was that there is a bright-line test that the situs of a sale is where the seller accepts a purchase order, in this case, the Village of Mark. This position was consistent with the regulations which were published at the time. However, in this case, the Department of Revenue found the situs of the selling activity to be Forest View, a finding which would create liability for the retail occupation taxes of that village, Cook County, and the Regional Transportation Authority. Hartney paid taxes, interest and penalties of $23,111,939 under protest and sought relief in the circuit court of Putnam County. That court agreed that the bright-line test for the situs of sale is where purchase orders are accepted and found for Hartney. The appellate court affirmed.
In this decision, the Illinois Supreme Court, court disagreed with the “Jurisdictional Questions” regulations of the Administrative Code. The court found them inconsistent with the statutes and with case law. The court said that the legislature has not adopted a single-factor test for the situs of retail activity. The supreme court’s own precedent calls for a fact-intensive inquiry to find the proper situs where there is a composite of many activities, and the legislature, by consistently employing the “business of selling” language, has effectively invoked the supreme court’s precedent in this regard. The supreme court said that the Department of Revenue has a duty to abate Hartney’s penalties and retail occupation tax liability for the relevant period because Hartney’s actions were consistent with the Department of Revenue’s regulations in effect at the time.