Village of Channahon, RTA at Odds Over Sales Tax Revenue

The Regional Transportation Authority is engaged in a fight with the Village of Channahon over what it believes are "sham" company offices and inappropriate sales tax revenues collected by the village, according to a Sun-Times News Group report.

"According to documents obtained by the RTA through a Freedom of Information Request, the Village of Channahon entered into an 'economic incentive agreement' that allowed Carol Stream-based CSC to avoid paying Carol Stream, DuPage County and RTA sales taxes and instead claim their sales were conducted in Channahon," said RTA chief of staff Jordan Matyas in an email.

"As part of the incentive agreement, Channahon kicked back to CSC and its tax consultant 85 percent of the municipal taxes as an incentive for CSC to claim they operated in Channahon," Matyas said.

Matyas said CSC is among dozens of companies in Illinois that have entered into agreements with towns such as Channahon, Kankakee and Sycamore in an attempt to avoid paying the appropriate tax, which in may cases is also at a higher rate. He said the agreements allow companies to funnel purchases through sham offices or middlemen and take advantage of a lower tax rate and then receive a kickback from the muncipality.

"Having just learned about this settlement that Channahon reached with Carol Stream reinforces our position that companies should not be allowed to avoid paying the appropriate sales taxes by operating sham offices," said RTA executive director Joe Costello in the email. "CTA, Metra and Pace riders rely on funding from sales taxes, and without this revenue our budget problems worsen."

Channahon Village Administrator Joe Pena declined to comment on the issue in the Sun-Times News Group report because of pending litigation.