(Chicago, IL) — August 23, 2011. Mayor Rahm Emanuel today had the City of Chicago file a lawsuit in the Circuit Court of Cook County seeking damages from the City of Kankakee, Village of Channahon and three brokers over a sales tax kickback scheme that is diverting sales tax revenue from Chicago.
“Companies are gaming the system and cheating Chicago’s taxpayers,” said Emanuel. “I have to be the voice for the taxpayers and I will not tolerate this.”
Chicago’s suit alleges that Kankakee and Channahon have attracted a large number of corporations and an enormous amount of revenue by offering Illinois retailers kickbacks of sales tax revenue if they purport to process their retail sales through brokers set up in those municipalities.
The brokers “accept” sales in Kankakee and Channahon on behalf of the retailers. Although this practice was prohibited by the Illinois legislature in 2004 but both municipalities continue to enter into such arrangements.
This practice is so profitable that Kankakee and Channahon now lead the state in annual retail sales per capita at $78,000 and $62,000 respectively—tenfold the per capita sales of Chicago and roughly double the per capita sales of municipalities that are home to major retail shopping malls.