Sales Tax Lawsuit Filed Against Village; Channahon Has Yet to Be Served

Crain's Chicago Business is reporting the Regional Transportation Authority has filed a $100 million lawsuit against and Kankakee, alleging to the detriment of the RTA and other taxing bodies.

A portion of has a 7.25 percent tax rate, lower than that of many neighboring communities. Some Chicago-based companies take advantage of that by shifting their point of purchase to satellite offices in the village, thus reducing costs to consumers and making their products more marketable, according to a Chicago Tribune report. As a result, Channahon is receiving the sales tax, instead of Chicago, in some cases.

In a statement released Tuesday, Channahon Interim Village Manager and Police Chief Joe Pena said village officials are aware of reports that Chicago taxing bodies intend to file a lawsuit, but have yet to be served.

The RTA has already filed a $100 million suit against Channahon and Kankakee, according to Crain's report, and Mayor Rahm Emanuel's office is also expected to pursue legal action against the communities on behalf of the city of Chicago.

"We find it surprising that the third largest city in the country would like to file a lawsuit against a small community of 13,000 (residents) whose annual budget is less than half of 1 percent of Chicago's annual budget," Pena said in the statement.

The statement from the village insists Channahon is following the law, and points out that the responsibility of allocating sales tax falls on the Department of Revenue, not individual municipalities in Illinois.