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Chicago-area RTA: United running 'sham' business

Published on NewsOK Modified: January 14, 2013 at 9:20 pm •  Published: January 14, 2013
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CHICAGO (AP) — The lawsuit filed against United Airlines, alleging that the company falsely claims to buy jet fuel in a rural Illinois community in order to skirt tens of millions of dollars in sales taxes, hinges on whether a transportation agency can prove the monumental purchasing task couldn't have been done from inside the airline's tiny office 70 miles from Chicago.

Throughout the lawsuit — which alleges the office doesn't have a computer and is only staffed by one part-time employee — the Regional Transportation Authority's argument boils down to this: United's contention that it is buying fuel in Sycamore is absurd.

It won't be enough for the RTA to show that United set up shop in the DeKalb County community of Sycamore to avoid paying close to $300 million in sales taxes. Rather, it must show that the work United says is going on in Sycamore is really being done at United's Willis Tower headquarters in downtown Chicago.

"The question before the courts is 'Where does the transaction happen?'" said Sue Hofer, a spokeswoman for the Illinois Department of Revenue, referring to an anticipated appeal to the state Supreme Court. A similar argument made by the department in a case involving an oil company was rejected by a trial court and last year by an appellate court.

Even RTA chief of staff Jordan Matyas acknowledges that no matter how much the agency and government agencies in Chicago and Cook County don't like small communities luring businesses with the promise of sweetheart deals that save them tens of millions of dollars in taxes, there is nothing they can do about if the work is actually being done there.

"If there's 10 people out there, their jet fuel experts, that's fine," he said. Instead, "The person that's out there is very part time, maybe two days a week, but not a full day. There's nothing going on out there and whoever is out there is not negotiating hundreds of millions of dollars in jet fuel," Matyas said.

To drive home that point, the RTA has distributed a video made by a consultant who visited United Aviation Fuels Corp., a subsidiary of United, showing an office that was closed at midday on a weekday, with nothing on the desks or any office equipment visible.

Cook County Board President Toni Preckwinkle said her office is investigating the allegations to determine if the county will join the lawsuit, which was filed in Cook County Circuit Court. In the past, the county has joined similar ones the RTA has filed against communities engaged in what they contend are illegal tax incentive programs.

"These allegations are very disturbing to me because basically these are allegations of tax cheating," she said.

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