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“This could literally put an end to us”

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Illinois

Luxury private jet companies were hoping state lawmakers might bail them out of four-year-old unpaid sales tax bills. Instead, billionaire Governor J.B. Pritzker greeted their pleas for mercy with a stiff arm on Monday.

“I am going to veto that bill if that lands on my desk,” Pritzker pledged, explaining that the plan the House passed last week “would forgive $50 million of taxes that are owed by people who are in this private jet industry.”

A special sales tax exemption for private jet facilities expired in 2014, and the companies said that caught them off guard.

“We did not collect those taxes from our customers,” West Star Aviation CEO Jim Rankin confessed. “We didn’t know we had to. Nobody did. Therefore, if we have to go back and pay that, we are going to have to pay that ourselves as a company. You can imagine how difficult that would be if a retail outlet had to go and pay sales tax when they did not collect it from their customers to begin with.”

The total money owed the state by all these companies is estimated at $50 million.

* Today…

Zeman took issue with the planes being described as “private luxury jets.”

“This isn’t some hip hop artist. It’s a corporation using a business tool, he says.

— Mark Maxwell (@MarkMaxwellTV) November 5, 2019

“This is going to be disastrous for our company if this doesn’t get overturned and we’ve been in business since 1965,” Zeman says. “This could literally put an end to us.”

— Mark Maxwell (@MarkMaxwellTV) November 5, 2019

posted by Rich Miller
Tuesday, Nov 5, 19 @ 12:23 pm

Comments

No other state collects this tax, if it is imposed why will consumers choose Illinois to service their private jets?

Obviously they won’t, they can literally fly anywhere and get a more competitive price.

Comment by Lucky Pierre Tuesday, Nov 5, 19 @ 12:28 pm
==they would’ve paid if they knew they owed a sales tax.==

I will have to try this one the next time I get audited./s

Comment by Jocko Tuesday, Nov 5, 19 @ 12:29 pm
He’s going to be in trouble for the “hip hop” comment, isn’t he?

Comment by City Zen Tuesday, Nov 5, 19 @ 12:29 pm
Beginning to think that this Administration is sometimes a “little too quick” and flippant with their public comments.. they should be smarter.. in this situation, anything short of a total veto now makes them look foolish.. if these companies close and jobs are lost in this area.. ouch

Comment by NotRich Tuesday, Nov 5, 19 @ 12:29 pm
a corporation using a bad business tool

Comment by Publius Tuesday, Nov 5, 19 @ 12:29 pm
It caught them off guard for 5 years?

Comment by Not a Billionaire Tuesday, Nov 5, 19 @ 12:30 pm
“This isn’t some hip hop artist.”

Wow.

Comment by Little Rico Tuesday, Nov 5, 19 @ 12:30 pm
So, who’s fault is it that the business didn’t know they were supposed to collect sales tax?
Dept of Revenue dropped a pretty big ball. Any other large mistakes like this undiscovered yet?

Comment by Bruce( no not him) Tuesday, Nov 5, 19 @ 12:32 pm
=== “This isn’t some hip hop artist. It’s a corporation using a business tool, he says.===

Welp, the empowerment to say just about anything you feel continues.

Comment by Oswego Willy Tuesday, Nov 5, 19 @ 12:32 pm
Veto the bill and raise their taxes

Comment by Anon312 Tuesday, Nov 5, 19 @ 12:32 pm
“If you didn’t pay your taxes, you couldn’t just use the excuse, ‘Oh, I didn’t pay my taxes because I didn’t know.’”

No hypocrisy whatsoever from the Porcelain Prince administration

Comment by Lucky Pierre Tuesday, Nov 5, 19 @ 12:32 pm
Gee nobody actually came to my door and told me I had to pay my real estate taxes. So o guess it is ok not to pay

Comment by DuPage Saint Tuesday, Nov 5, 19 @ 12:33 pm
Is there a reason that the Department of Revenue didn’t, you know, speak up about a sales tax that wasn’t being colleted?

==No other state collects this tax==

So what? I get tired of this “this state doesn’t do this” argument. It’s a juvenile argument.

Comment by Demoralized Tuesday, Nov 5, 19 @ 12:33 pm
== “I already lost a $150,000 job from a private individual who took his plane to Florida,” Zeman says. ==

This supposed “private individual” monitors Mark Maxwell’s twitter feed, do they? And they made a snap decision to change based on the fact that his regular repair shop hasn’t been paying taxes but may have to do so going forward?

This guy is full of it. At first I was on the fence about this because jobs, but this guy can go kick rocks. I hope his mechanics can find work for someone more honest, even if it isn’t in Illinois

Comment by Lester Holt’s Mustache Tuesday, Nov 5, 19 @ 12:34 pm
==I get tired of this “this state doesn’t do this” argument. It’s a juvenile argument.==

Back to square one for the Fair Tax squad.

Comment by City Zen Tuesday, Nov 5, 19 @ 12:37 pm
Instead of trying to sneak through a bill to zero out their tax debt, maybe they ought to beg for a low interest payment plan instead?

The sense of entitlement is strong in this industry.

Comment by 47th Ward Tuesday, Nov 5, 19 @ 12:37 pm
Casual dog whistle racism here with the dropping of “hip hop artist”, not the best way to keep your rich people focused tax break. Yikes.

Comment by Stark Tuesday, Nov 5, 19 @ 12:37 pm
This is going to sound weird, but I might believe the private jet companies. Otherwise, I would have to believe that all of them, together, somehow came up with the idea of “yeah, we’ll tell them we forgot to collect the taxes.”, and that someone in each of those companies said “yeah, Bob - that sounds like a great idea. It’s foolproof!”

That doesn’t mean I think the taxes shouldn’t get paid, but it does seem reasonable that some arrangement should be set up. Either for the company to pay the taxes over a period of time, or for the companies to report to the state those businesses/individuals that should have paid the higher tax - and then for the State to treat that as an additional tax liability for whomever.

The exact mechanics of the collection can be worked out. but it seems like this can be resolved without either the jet companies going bankrupt or the State waiving repayment.

Comment by Name Withheld Tuesday, Nov 5, 19 @ 12:37 pm
=== No other state collects this tax===

States are funny that way, they do what they do for their own states, no matter what other states do.

Comment by Oswego Willy Tuesday, Nov 5, 19 @ 12:38 pm
“This isn’t some hip hop artist” is the epitome of a dog whistle. “These are not undeserving Black people”

Comment by YSW Tuesday, Nov 5, 19 @ 12:39 pm
Hip Hop artist huh? Isn’t this the guy who took out a toilet to avoid taxes on one of the houses he owned or something along that line? Sounds like JB ought practice what he preaches. Remember the old line about people who live in glass houses shouldn’t throw stones?

Comment by Ginhouse Tommy Tuesday, Nov 5, 19 @ 12:40 pm
I’m not sure, the hip hop comment really isn’t that bad (even though the comment section may disagree). Also the one statement regarding DoR is the most accurate and damning thing about the whole conundrum and is worth repeating. Expecting people to pay when the government drops the ball is ludicrous

Comment by Normal Guy Tuesday, Nov 5, 19 @ 12:41 pm
=== Back to square one for the Fair Tax squad.===

(Sigh)

Saying no one else does this… is different than making the case that something *is* possible with an example.

Comment by Oswego Willy Tuesday, Nov 5, 19 @ 12:42 pm
Is there just one company affected? If there are a number of them, how did they all happen to forget?

The legislators were pretty fast to write off $50 million that the state is legally entitled to. Whoever negotiated that deal did a stupendous job for the tax debtors.

Comment by anon2 Tuesday, Nov 5, 19 @ 12:44 pm
Another business tool that corporations use are Accounting Firms. And if the firm JA Air uses didn’t tell them about the tax they were likely negligent, so maybe it’s time for Brad and others to initiate a heart-to-heart with theirs.

Will customers use lower-cost services elsewhere? Maybe. I know that Waukegan airport has a lot of corporate jets hangered there, I have to wonder how big this market really is?

Comment by Stuntman Bob's Brother Tuesday, Nov 5, 19 @ 12:45 pm
What services/products do these facilities provide that have a sales tax? Fuel? Stocking the bar and the fridge?

Comment by Anonymous Tuesday, Nov 5, 19 @ 12:46 pm
=== During the Rauner administration, the Department of Revenue conducted audits at some of the private luxury jet shops but failed to identify the missing tax revenue. ===

It seems to me based on this little gem of reporting by Mark Maxwell that it is very hard to blame the companies. If the Department of Revenue did not know about the new sales tax law, it is hard to blame business owners.

Comment by Thomas Paine Tuesday, Nov 5, 19 @ 12:47 pm
50 million bucks. Tell me again how there is not enough waste, inefficiency, or incompetence in state government to have a meaningful effect on the budget.

Comment by Captain Obvious Tuesday, Nov 5, 19 @ 12:47 pm
Brad Zeman took out his toilets too? Funny thing is you don’t get a tax break for taking out toilets. You do get a tax break for renovations.

Comment by Anonymous Tuesday, Nov 5, 19 @ 12:51 pm
Lester Holt’s Mustache,

You may be surprised by this, but most corporate aviation departments are well tuned into costs and changes to taxes and other fees. For example the number of companies that change what FBO they use at Midway due to fees and charges by the FBOs

The AOPA is likely all over this as well and sharing that information with their members. The AOPA does a fair amout of work in this area with fees and taxes.

Comment by OneMan Tuesday, Nov 5, 19 @ 12:53 pm
I guess the question is whether the Department of Revenue normally sends out alerts for changes in tax requirements, and they didn’t in this case.

Comment by yeah Tuesday, Nov 5, 19 @ 12:54 pm
“If the Department of Revenue did not know about the new sales tax law, it is hard to blame business owners.”

This is not surprising. Audit is a hot mess and really mismanaged. Also I’ll say that that is intentional. I believe there’s a reason they have kept incompetence in place. It certainly helps large corporations get away with stuff like this. If they got competent staff and management in there they would collect so so so much more for the state.

Comment by Spitball Tuesday, Nov 5, 19 @ 1:00 pm
Zeman certainly demonstrated his expertise on what it means to be a “business tool.”

– MrJM

Comment by @misterjayem Tuesday, Nov 5, 19 @ 1:03 pm
Geez you guys are stretching the hip-hop thing.
“It’s not some rich celebrity wanting a joy ride just because he can”.

I’d disagree that private planes are a necessary business expense, but that’s clearly his pitch.

To the point, they owe the tax. Period. Come up with some kind of payment plan to pay the tax, hopefully giving them some breathing room so they don’t go bankrupt, but they owe the tax.

Comment by Perrid Tuesday, Nov 5, 19 @ 1:08 pm
It’s amazing how many commenters on here are ignore the fact that Illinois will be losing dozens if not hundreds of good paying jobs because of the state agency’s mistakes couple with a flippant attitude by our governor’s office.

Comment by Downstate Illinois Tuesday, Nov 5, 19 @ 1:16 pm
== It’s not some rich celebrity wanting a joy ride just because he can.==
Entertainers often have to travel and a hip hop artist can use a private jet as a tool to get to jobs.
Yet some how the hip hop artist was singled out. Why?

Comment by 17% Solution Tuesday, Nov 5, 19 @ 1:18 pm
==a corporation using a bad business tool==

Maybe not so bad if it’s completely free of tax. Hard not to see this as corporate welfare - especially after the hip hop comment.

Also, my bet is that Chance the Rapper has much better business and privacy reasons to use a private jet than the CFO of a generic midwest based corporation. Seems like vanity, more than anything else, would be driving the latter’s decision to fly privately.

Comment by Will not be Undersold Tuesday, Nov 5, 19 @ 1:28 pm
This reminds me of a similar, but not identical situation in C-U regarding local hospitals and property tax exemptions. For years the Hospitals had been deemed exempt from property taxes in exchange for charitable care provided to needy citizens in the community. That exemption has been called into question in recent years. Most interestingly, at least one of the Hospitals (Carle), reserved those annual property tax liabilities in case that judgement was ever reversed in the future. Seemingly a prudent decision.

I don’t disagree ILDOR dropped the ball, but I think it’s poor planning and foresight by the business owners to not (at least partially) reserve these annual tax amounts to protect themselves (and their employees, I might add) from significant future liabilities. They have the foresight to pay lobbyists in Springfield to advance this legislation; they are aware of the consequences if it does not pass. If the tax bill ends up being material, it seems fair that a payment plan would be an option for owners to pay over several years instead of having to make up 4+ years of taxes in a single year.

Comment by Chambanalyst Tuesday, Nov 5, 19 @ 1:32 pm
Tell me about the number of jobs and pay scale. How many good paying jobs has the $50 million subsidized over five years? It went uncollected for five years, so give them five years or more to pay it off. That assumes they don’t go out of business. If they go bankrupt, how much tax do we collect then?

Maybe we should look at the other sales tax exemptions that we give, like egg machinery and equipment.

Comment by Langhorne Tuesday, Nov 5, 19 @ 1:37 pm
AG machinery

Now i have egg…nevermind.

Comment by Langhorne Tuesday, Nov 5, 19 @ 1:39 pm
Didn’t their lobbyist catch this? Did IDOR really not send out the notices?

Comment by Just Me 2 Tuesday, Nov 5, 19 @ 1:51 pm
== The AOPA is likely all over this as well and sharing that information with their members. The AOPA does a fair amout of work in this area with fees and taxes.==

Oneman, I’ll take your word for it - but if that’s the case, why didn’t they know their member companies weren’t paying necessary taxes? If they’re as knowledgeable as you claim, I find it pretty hard to believe that they and the entire industry was unaware that this tax even existed.

As an independent contractor, there isn’t a snowballs chance in hades that I’d be let off the hook by the state because I was “unaware“ of a tax or fee. Just doesn’t happen. The government cannot be allowed to pick and choose whom to let off the hook on this stuff. Otherwise, every company and contractor in the state will start claiming ignorance.

Comment by Lester Holt’s Mustache Tuesday, Nov 5, 19 @ 1:51 pm
== It’s amazing how many commenters on here are ignore the fact that Illinois will be losing dozens if not hundreds of good paying jobs==

It’s amazing to me that you’d be willing to let millions of tax dollars that could have been put towards paying down out ridiculously high pensions debt float away in order to allow some tax cheats to skate. If we let every company get away with not paying taxes because they employ people, all of that pensions debt is going to be put directly on the shoulders of taxpaying citizens. We pay enough taxes in this state, I’m not gonna pay more just because some rich private jet CEO doesn’t want to pay his

Comment by Lester Holt’s Mustache Tuesday, Nov 5, 19 @ 1:57 pm
A lot of regional and municipally-owned airports are at risk of losing their FBOs over this fiasco.

Comment by sulla Tuesday, Nov 5, 19 @ 1:59 pm
Another business looking for a handout, instead of paying taxes it (or its accountants) should have reasonably known the tax was due all along. 50 million is a big give away. Even if IDOR messed up, the still owed it. Work out a payment plan, instead of a private bill which may also violate the Illinois Constitution, Bill of Rights, Art. 16: “No law….making an irrevocable grant of special privileges or immunities, shall be passed.”

Comment by revvedup Tuesday, Nov 5, 19 @ 2:33 pm
Did IDOR really not send out the notices?

I don’t think it’s IDOR’s job to send out notices.
I think they send out notices if IDOR has made a mass mistake but I don’t think they send out notices to say the law has changed.
You do realize that Rauner cut functionality to the bone right?

Comment by Spitball Tuesday, Nov 5, 19 @ 2:44 pm
==A special sales tax exemption for private jet facilities expired in 2014, and the companies said that caught them off guard==

Not wanting to extend too much sympathy here, but the State Dept. of Revenue bears some responsibility here as the ultimate collector, and they can be very unclear on some of these issues.

If justice means putting the service (and future tax dollars) out of business, then the remedy borders on silly.

Work something out. Low interest long term repayment plan, some forgiveness or not, whatever. The State Dept. of Revenue isn’t blameless here at all. They appear to be confused about the expiration of the exemption too. What does it say about them that it took four years to discover this honey pot in a very cash-strapped state? Work together and work something out. Zero tolerance on this by the Gov is a little too self righteous given his experience on taxing issues.

Make this mountain into a molehill. Don’t endanger future revenue for a one day headline hit.

Comment by A guy Tuesday, Nov 5, 19 @ 3:06 pm
=We didn’t know we had to. Nobody did.=

When the exemption was passed, you didn’t notice the expiration date?

Where were your accountants? Because I know you have accountants.

Maybe you should have a chat with your CFO about YOUR screw-up?

I notice your website says that “attention to detail” is a staple of your philosophy. I guess not all details.

Comment by JoanP Tuesday, Nov 5, 19 @ 3:08 pm
==I don’t think it’s IDOR’s job to send out notices.==

Yes it is. Especially at the end of a legislated program. They should have sent more than one over a year’s period before the expiration.
I believe they didn’t know either IDOR.

Comment by A guy Tuesday, Nov 5, 19 @ 3:12 pm
Let them eat jet fuel.

Comment by Commisar Gritty Tuesday, Nov 5, 19 @ 3:13 pm
The 2014 law repealing the tax break. Anyone have the Public Act #? Was it in the FY 2015 BIMP?

Comment by Anyone Remember Tuesday, Nov 5, 19 @ 3:13 pm
Yes it is.

Do you work for IDOR? Are you an accountant?

Comment by Spitball Tuesday, Nov 5, 19 @ 3:19 pm
Maybe Rich or some other reporter can ask an IDOR spokesperson if they were supposed to do this.
I don’t think they were required to do so.

Comment by Spitball Tuesday, Nov 5, 19 @ 3:21 pm
That is $50 million in taxes against how much in revenue? Also, what is the tax per unit (take offs/landings/fueling/sales).

I think before folks respond we should understand the context of that figure.

Comment by wndycty Tuesday, Nov 5, 19 @ 3:22 pm
The lobbyists screwed up. And the high-priced accountants and lawyers. The exemption was effective January 1, 2010. Section 2-70 of the sales tax act explicitly states that an exemption expires 5 years after enactment. It is there for all to see. The lobbyist should have known they had to come back in 5 years to get the exemption extended or should have added language when it was enacted that stated the exemption is not subject to Section 2-70. Amateurs. Don’t blame IDOR.

Comment by SW Tuesday, Nov 5, 19 @ 3:26 pm
==Do you work for IDOR? Are you an accountant?==

Better question SB would be, are you or have you ever been a retailer accountable to the IDOR for collecting sales tax?

To that question, yes.

Comment by A guy Tuesday, Nov 5, 19 @ 3:29 pm
Fair Tax for the jet set. JB playing to his base.

Comment by Donnie Elgin Tuesday, Nov 5, 19 @ 3:31 pm
Is a long-term payment plan not on the table?

Comment by Just Observing Tuesday, Nov 5, 19 @ 3:31 pm
sounds like we should probably double the tax and treble the penalities

also having a good chuckle at the idea that a private jet is ever even close to a necessary “business tool”

Comment by brickle Tuesday, Nov 5, 19 @ 3:33 pm
“Is a long-term payment plan not on the table?” I keep hearing radio ads about some 800-number they can call…

Comment by Skeptic Tuesday, Nov 5, 19 @ 4:26 pm
The problem with the whole “state is equally liable” bit is that deadbeats try that argument all the time with IDOR.

A sure way to find out if he’s telling the truth is for him (or his POA) to request a copy of every piece of correspondence sent to the company in the last 5 years. Since correspondence is auto generated (mostly) at IDOR, I bet they got a notice.

And if they didn’t get a notice, I bet the change was reflected in the sales tax return instructions 5 years ago. There’s a reason why companies who owe 50 million big ones in sales tax hire accounting firms to file their taxes.

Ethically, however, there are literally thousands of Illinoisans who call every year saying the exact same thing this guy said. The difference is they don’t have lobbyists. So they have to beg IDOR to not garnish their wages, lein their property, and set up pay plans for 5 years of less. These companies shouldn’t get a break either.

Comment by MG85 Tuesday, Nov 5, 19 @ 4:43 pm
Nice try A Guy
Your answer to my question would be
No
ergo
You don’t know if IDOR was responsible for sending out a letter.
Reading SW comment about the bill language
I think supports my argument.

Comment by Spitball Tuesday, Nov 5, 19 @ 4:45 pm
Maybe he should have checked with JBP. Never heard of anyone that knows how to get out of paying taxes like our new Gov.

Comment by Back to the Future Tuesday, Nov 5, 19 @ 4:46 pm
=No hypocrisy whatsoever from the Porcelain Prince administration=

What tax is he delinquent in paying?

===A special sales tax exemption for private jet facilities expired in 2014, and the companies said that caught them off guard===

So this thing that is really important to them and could shutter their business and is a big deal and that one poster (without evidence) said could cost dozens of “good jobs” (are their bad ones?) and is a lot of money and, again, is a huge deal….

Just caught them off guard?

Please. Pull my other leg and it will play jingle bells.

More like they tried to ignore it and maybe it would just go away.

Comment by JS Mill Tuesday, Nov 5, 19 @ 4:47 pm
I’m a private pilot and my plane has to get continued maintenance (annual inspection, etc) in addition to occasional repairs (new tire). I’m charged sales tax at the Springfield airport and other locations where the plane has been serviced.

Comment by 4 percent Tuesday, Nov 5, 19 @ 5:10 pm
Elliott threatened to move their FBO in Moline if they didn’t get the state to pass a property tax bill. The Illinois Supreme Court overturned the legislation that was passed just for them. They never moved and in fact hired more people the year after the case was decided.

Comment by Chicagonk Tuesday, Nov 5, 19 @ 5:27 pm
Is he by chance a regular at Buffalo Wild Wings in Naperville?

Comment by srboisvert Tuesday, Nov 5, 19 @ 6:37 pm
IDOR has no statutory responsibility to notify taxpayers of changes to the tax law just like the police and district attorney’s have no obligation to notify the public of changes to criminal law. IDOR does try to notify taxpayers of major tax changes as a public service, but the resources for doing that have dwindled, so it is easy to miss some of these. That being said, Illinois Administrative Code Section 130.120(rr) states this exemption sunsetted in 2104, so it’s not like there was no notice at all. This reg was updated in March of this year, but this wasn’t one of the sections changed, so the official notice could have occurred prior to the expiation in 2014.

Honestly, when you lobby to have a special provision added to the tax code that only benefits a small group of people, you really need to keep on top of that exemption. Expecting IDOR to notify you when your special exemption goes away is business malpractice.

Comment by Pelonski Tuesday, Nov 5, 19 @ 7:02 pm
4 Percent,

The exemption only applied to a small group of repair facilities that had a special FAA classification. In other words, like many exemptions in Illinois, it was created to benefit only a small number of companies at the expense of others doing similar work.

Comment by Pelonski Tuesday, Nov 5, 19 @ 7:06 pm
This is not a failing of IDOR. Nope. This falls squarely on the shoulders of DCEO. Entirely. What do they do all day there? I would take the entire $50 million from there budget.

Comment by Blue Dog Dem Tuesday, Nov 5, 19 @ 9:00 pm
“I’m not a businessman, I’m a business, man.”

Comment by Moira Wednesday, Nov 6, 19 @ 7:38 am
50 million dollars in tax dollars not collected sounds as if numerous problems with this issue exist

Comment by illinois_citizen Wednesday, Nov 6, 19 @ 8:17 am
Warren Buffett when he finally started using a private jet, named it “The Indefensible”. So much for necessary business expense

Comment by Oldpanda Thursday, Nov 7, 19 @ 3:59 pm

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