2017 IL 121634 

IN THE
 

SUPREME COURT
 

OF
 

THE STATE OF ILLINOIS
 

(Docket No. 121634) 

CITIBANK, N.A., Appellee, v. THE ILLINOIS DEPARTMENT OF 

REVENUE et al., Appellants. 

Opinion filed November 30, 2017. 

CHIEF JUSTICE KARMEIER delivered the judgment of the court, with 

opinion. 

Justices Freeman, Thomas, Kilbride, Garman, Burke, and Theis concurred in 

the judgment and opinion. 

OPINION 

¶ 1 In this appeal, we review the determination of the Department of Revenue 

(Department) on a claim filed by Citibank, N.A. (Citibank), for tax refunds 

pursuant to the provisions of section 6 of the Retailers’ Occupation Tax Act 

(ROTA) (35 ILCS 120/6 (West 2012)). Citibank sought refunds of ROTA taxes 

paid through affiliated retailers upon their sale of goods, transactions that were 
 

 

 

 

 

 

 

financed through Citibank, and that ultimately resulted in uncollectible debt, 

portions of which corresponded to the tax originally paid. The Department denied 

Citibank’s claim. The circuit court of Cook County reversed the Department’s 

decision. The appellate court affirmed the decision of the circuit court, concluding 

that Citibank had standing to pursue a refund of ROTA taxes, attributable to the 

uncollected debts, as a result of the assignments from the retailers. 2016 IL App 

(1st) 133650. We granted the Department’s petition for leave to appeal (Ill. S. Ct. 

R. 315(a) (eff. Mar. 5, 2016)) and now reverse the judgment of the appellate court. 

¶ 2 The ROTA imposes a tax “ ‘upon persons engaged in the business of selling at 

retail tangible personal property.’ ” Kean v. Wal-Mart Stores, Inc., 235 Ill. 2d 351, 

362 (2009) (quoting 35 ILCS 120/2 (West 2006)). The tax is computed as a 

percentage of “gross receipts” (35 ILCS 120/2-10 (West 2012)), defined as the 

“total selling price” (35 ILCS 120/1 (West 2012)). The retailer making the sale is 

responsible for remitting the tax to the Department. Kean, 235 Ill. 2d at 363. We are 

concerned here with the refund provisions of the ROTA. 

¶ 3 PRINCIPAL STATUTE AND ADMINISTRATIVE PROVISION 

¶ 4 Section 6 of the ROTA, which governs issuance of credit memoranda or 

refunds of ROTA tax payments, provides in pertinent part: 

“If it appears, after claim therefor filed with the Department, that an amount of 

tax or penalty or interest has been paid which was not due under this Act, 

whether as a result of a mistake of fact or an error of law, except as hereinafter 

provided, then the Department shall issue a credit memorandum or refund to the 

person who made the erroneous payment ***. *** If no tax or penalty or 

interest is due and no proceeding is pending to determine whether such person 

is indebted to the Department for tax or penalty or interest, the credit 

memorandum or refund shall be issued to the claimant; or (in the case of a credit 

memorandum) the credit memorandum may be assigned and set over by the 

lawful holder thereof, subject to reasonable rules of the Department, to any 

other person who is subject to this Act [or other specified tax acts]. *** 

*** No credit may be allowed or refund made for any amount paid by or 

collected from any claimant unless it appears (a) that the claimant bore the 

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burden of such amount and has not been relieved thereof nor reimbursed 

therefor and has not shifted such burden directly or indirectly through inclusion 

of such amount in the price of the tangible personal property sold by him or her 

or in any manner whatsoever; and that no understanding or agreement, written 

or oral, exists whereby he or she or his or her legal representative may be 

relieved of the burden of such amount, be reimbursed therefor or may shift the 

burden thereof; or (b) that he or she or his or her legal representative has repaid 

unconditionally such amount to his or her vendee (1) who bore the burden 

thereof and has not shifted such burden directly or indirectly, in any manner 

whatsoever; (2) who, if he or she has shifted such burden, has repaid 

unconditionally such amount to his own vendee; and (3) who is not entitled to 

receive any reimbursement therefor from any other source than from his or her 

vendor, nor to be relieved of such burden in any manner whatsoever. No credit 

may be allowed or refund made for any amount paid by or collected from any 

claimant unless it appears that the claimant has unconditionally repaid, to the 

purchaser, any amount collected from the purchaser and retained by the 

claimant with respect to the same transaction under the Use Tax Act. 

* * * 

If a retailer who has failed to pay retailers’ occupation tax on gross receipts 

from retail sales is required by the Department to pay such tax, such retailer, 

without filing any formal claim with the Department, shall be allowed to take 

credit against such retailers’ occupation tax liability to the extent, if any, to 

which such retailer has paid an amount equivalent to retailers’ occupation tax or 

has paid use tax in error to his or her vendor or vendors of the same tangible 

personal property which such retailer bought for resale and did not first use 

before selling it, and no penalty or interest shall be charged to such retailer on 

the amount of such credit. However, when such credit is allowed to the retailer 

by the Department, the vendor is precluded from refunding any of that tax to the 

retailer and filing a claim for credit or refund with respect thereto with the 

Department. The provisions of this amendatory Act shall be applied 

retroactively, regardless of the date of the transaction.” 35 ILCS 120/6 (West 

2012). 

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¶ 5 The applicable administrative regulation promulgated by the Department (86 

Ill. Adm. Code 130.1960 (2000)) purports to govern ROTA tax liability and tax 

relief for “lending agencies,” “installment sales,” and “bad debts,” addressing each 

in separate subsections.1 The issue in this appeal concerns eligibility for tax relief 

on account of bad debts. Hence, we consider here subsection (d), relating to “bad 

debts.” Subsection (d), titled “Bad Debts,” provides: 

“1) In case a retailer repossesses any tangible personal property and 

subsequently resells such property to a purchaser for use or consumption, his 

gross receipts from such sale of the repossessed tangible personal property are 

subject to Retailers’ Occupation Tax. He is entitled to a bad debt credit with 

respect to the original sale in which the default has occurred to the extent to 

which he has paid Retailers’ Occupation Tax on a portion of the price which he 

does not collect, or which he is not permitted to retain because of being required 

to make a repayment thereof to a lending agency under a ‘with recourse’ 

agreement. Retailers of tangible personal property other than motor vehicles, 

watercraft, trailers and aircraft that must be registered with an agency of this 

State may obtain this bad debt credit by taking a deduction on the returns they 

file with the Department for the month in which the federal income tax return or 

amended return on which the receivable is written off is filed, or by filing a 

claim for credit [as] provided in subsection (d)(3) of this Section. Because 

retailers of motor vehicles, watercraft, trailers and aircraft do not pay Retailers’ 

Occupation Tax to the Department on retail sales of motor vehicles, watercraft, 

trailers, and aircraft with monthly returns, but remit the tax to the Department 

on a transaction by transaction basis, they are unable to take a deduction on the 

returns that they file with the Department, but may file a claim for credit with 

the Department, as provided in subsection (d)(3), on any transaction with 

respect to which they desire to receive the benefit of the repossession credit. 

2) Retailers who incur bad debt on any tangible personal property that is not 

repossessed may also obtain bad debt credit as provided in subsections (d)(1) 

and (3). 

1

Finance companies and other lending agencies are, generally, liable for payment of tax in cases 

in which they engage in the business of selling to users or consumers tangible personal property to 

which they hold or acquire title. 86 Ill. Adm. Code 130.1960(a) (2000). 

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3) In the case of tax paid on an account receivable that becomes a bad debt, 

the tax paid becomes a tax paid in error, for which a claim for credit may be 

filed in accordance with Section 6 of the Retailers’ Occupation Tax Act, on the 

date that the Federal income tax return or amended return on which the 

receivable is written off is filed.” 86 Ill. Adm. Code 130.1960(d) (2000). 

¶ 6 BACKGROUND 

¶ 7 Departmental Proceedings 

¶ 8 Citibank’s claim was submitted to the Department’s administrative law judge 

(ALJ) on stipulated facts. In the parties’ stipulations, Citibank’s business 

relationship with the pertinent Illinois retailers was explained as follows. 

¶ 9 Citibank provided sales financing programs to numerous retailers in Illinois. As 

part of their normal business practice, the retailers offered customers the option of 

financing their purchases, including the amount of Illinois tax due on the purchases. 

Citibank would originate or acquire consumer charge accounts and receivables 

from the retailers on a non-recourse basis.2 When a customer financed a purchase 

using the consumer’s account, Citibank remitted to the retailer the amount the 

customer financed. That amount included some or all of the purchase price, 

depending upon whether the customer financed the entire purchase or only a 

portion of the purchase, and the amount of the tax owed based on the selling price 

of the property purchased. “The retailers then remitted the complementary amount 

of the [ROTA] tax they owed to the State for each transaction.” 

¶ 10 Under the agreements between Citibank and the retailers, Citibank acquired 

“any and all applicable contractual rights relating thereto, including the right to any 

and all payments from the customers and the right to claim Retailer’s Occupation 

Tax (ROT) refunds or credits.” 

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2

As the term “non-recourse” suggests, a lender financing debt—Citibank in this case—would 

have no recourse or right against the other named parties—here the Illinois retailers who initiated 

the sale-on-credit transactions—in the event of default. See Black’s Law Dictionary 1740 (9th ed. 

2009) (defining “without recourse” as “without liability to subsequent holders”). 
 

 

 

 

 

 

¶ 11 Some of the customers subsequently defaulted on their accounts. Those 

defaults form the bases for Citibank’s claim in this case. When the customers 

defaulted, they did not repay the full amount of the purchase price and the tax. After 

reasonable attempts to collect the balances that remained on the defaulted accounts, 

Citibank determined that they were worthless, i.e., that they were “uncollectable 

and legal action to enforce payment would not result in the satisfaction of execution 

on a judgment.” 

¶ 12 Consequently, Citibank wrote the remaining balances off as worthless on its 

books and records. The stipulation specifically provides that “Citi[bank], and not 

the retailers, bore the economic loss on these defaulted accounts.” Citibank claimed 

the remaining, unpaid balances on those accounts as bad debts, pursuant to section 

166 of the Internal Revenue Code (26 U.S.C. § 166 (2006)), on its corporate 

income tax returns. The bad debts were written off over the period of January 1, 

2008, to December 31, 2009, and were claimed on Citibank’s corporate income tax 

returns covering that period. 

¶ 13 On September 28, 2010, Citibank filed a claim for a refund or credit. In its 

claim, Citibank sought a refund of $1,600,853.32, which the parties in this case 

stipulated “is the portion of Account balances that were written off [by Citibank] as 

bad debts that is attributable to the ROT.” It was further stipulated, however, that 

the tax claimed to have been overpaid by Citibank was “approximately 8% of the 

amount of the additional deductions reported *** while the Illinois ROT rate was 

(and remains) 6.25%.” Moreover, it was undisputed that Citibank’s claim did not 

contain some of the detailed information required to be reported within different 

parts of the form used by the Department. Apparently, that was at least in part 

because Citibank “did not engage in the occupation of retailing.” 

¶ 14 On January 31, 2011, the Department denied Citibank’s claim. In response, 

Citibank requested an administrative hearing. In his recommendation for 

disposition, which was based on the foregoing stipulated facts, the presiding ALJ 

recommended that Citibank’s claim be denied on the bases that (1) Citibank did not 

include all of the required information or sufficient detail on its application for a 

refund, (2) Citibank did not bear the burden of the ROTA tax, (3) the ROTA tax 

was not paid in error, (4) there was no evidence that any erroneously paid taxes 

were refunded to the consumer, (5) Citibank was not the remitter of the taxes to the 

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State, and (6) the assignments from the retailers to Citibank did not give Citibank a 

right to a refund of the ROTA taxes. On December 13, 2012, the Director of the 

Department adopted the ALJ’s recommendation. Citibank sought review in the 

circuit court. 

¶ 15 Circuit Court Decision 

¶ 16 The circuit court identified the issue before it as “whether Plaintiff [Citibank] is 

entitled to a refund of tax that is equal to a portion of the ROT remitted to the 

Department by retailers for whom certain of Plaintiff’s credit account customers 

made retail purchases of tangible personal property, and which accounts were later 

written off by Plaintiff as bad debts.” 

¶ 17 In enunciating preliminary principles of administrative review, the circuit court 

acknowledged potentially countervailing considerations as expressed in this court’s 

opinions. The court noted the general principles that courts give “substantial weight 

and deference to an interpretation of an ambiguous statute by the agency charged 

with the administration and enforcement of the statute” and that “administrative 

regulations have the force of law and are construed under the same standards 

governing statutory construction.” However, the circuit court also emphasized the 

limitations upon an administrative agency’s authority to promulgate regulations, 

observing that an administrative agency interpreting a statute “cannot expand 

statutory language by implication beyond its clear import” and that “a regulation 

cannot create requirements, exceptions, limitations or conditions that conflict with 

the express legislative intent as reflected in the statutory language.” 

¶ 18 The court also acknowledged—quoting this court’s decision in Peoples Store of 

Roseland v. McKibbin, 379 Ill. 148, 152 (1942)—“that in the absence of statute, 

taxes voluntarily paid cannot be recovered no matter how meritorious the claim” 

and that section 6 of the ROTA “is a special remedial statute” (id.) limited to 

persons—“normally retailers,” the circuit court conceded—who have paid the tax 

pursuant to the ROTA “by reason of mistake,” what the circuit court characterized 

as “a tax that was not actually due.” 

¶ 19 Following a recitation of section 6 of the ROTA and subsection (d) of section 

130.1960, the court first observed that it was “undisputed” that “had the retailers 

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provided finance arrangements to their customers for purchases of tangible 

personal property, and the customers then defaulted on those, *** the retailers 

would be entitled to a refund of the tax.” The court then focused on the applicable 

administrative regulation, commenting that subsection (d)(3) is controlling, “not 

sections (d)(1) or (2) as the ALJ stated.”3 The court went on to assert, however, 

“even if the issue was whether plaintiff was a retailer, the retailers properly 

assigned all their rights to plaintiff, who therefore stepped into the shoes of the 

retailer and is entitled to the refund.” 

¶ 20 The court stated that subsection (d)(3) is “not limited to accounts receivable 

held only by retailers.” The court believed it could not be so limited, as to do so 

would be to “impose a limitation on a statute that the legislature did not prescribe.” 

“Because the legislature did not limit section 6 of ROTA to retailers, the 

Department’s regulation, 86 Ill. Adm. Code § 130.1960, cannot limit section 6 to 

retailers.” The circuit court observed that section 6 references the right of a 

“claimant”—not a “retailer”—to a credit or refund for—in the words of the 

court—“any amount of tax or penalty or interest that has been paid which was not 

due under the Act.” 

¶ 21 Thus, in the court’s view, Citibank was entitled to a credit or refund so long as 

Citibank met the conditions specified in the second paragraph of section 6 of the 

ROTA, which the court paraphrased as follows: (1) plaintiff bore the burden of 

such tax amount; (2) plaintiff has not been reimbursed for the tax or shifted the 

burden of the tax; and (3) no understanding or agreement exists whereby plaintiff 

may be relieved of the burden of such amount, be reimbursed therefor, or shift the 

burden thereof. 

¶ 22 With respect to the first requirement, the circuit court observed, “[i]n a normal 

situation under the ROTA, the retailers shift the burden of the tax to the consumer 

by including it in the purchase price.” The court reasoned, if the burden could be 

shifted in that way, it could “similarly be shifted to a finance company such as 

plaintiff.” The court noted that the parties had stipulated that Citibank had supplied 

some or all of the purchase price to the retailer, which included the tax the 

3

Subsections (d)(1) and (d)(2) specifically refer to retailers; subsection (d)(3) does not but is 

referenced in subsection (d)(2) as a remedy for “retailers.” 

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purchaser owed based on the selling price. Although the retailers remitted to the 

Department the total ROTA payment due on the purchase price, the court observed 

it was Citibank that had advanced funds corresponding to financed tax amounts yet 

to be paid by the purchasers. Citibank paid those amounts through the retailers as 

intermediaries. In light of that reality, the court found Citibank bore the burden of 

the tax. 

¶ 23 The court further found, per the additional section 6 requirements, that Citibank 

had not been reimbursed for the tax paid, as the purchasers had defaulted on the 

accounts, and, because of the “without recourse” transaction with the retailers, 

there was no agreement whereby Citibank could be relieved of the tax burden. The 

circuit court rejected the ALJ’s insistence that Citibank would have to repay to the 

purchasers the tax collected from them before plaintiff could claim a refund on tax 

amounts it had financed. The court noted: “Plaintiff cannot repay something it 

never received in the first place.” The court observed that Citibank was not seeking 

a refund for tax amounts paid by the purchasers; it was seeking, pursuant to 

stipulated fact, the portion of account balances that were written off by Citibank as 

“bad debt[ ] that is attributable to the ROT.” 

¶ 24 Addressing the effect of assignment, citing this court’s opinion in People ex rel. 

Stone v. Nudelman, 376 Ill. 535, 539 (1940), the circuit court noted the general rule 

that, in the absence of language in the statute prohibiting it, claims against the 

government are assignable. The court believed there was no such prohibition in 

either section 6 of the ROTA or section 130.1960 of the Administrative Code. As 

an assignment operates to transfer to the assignee all of the assignor’s right, title, or 

interest in the thing assigned, the court concluded that Citibank “stepped into the 

shoes of the retailers” for purposes of claiming a refund. 

¶ 25 The circuit court dismissed the ALJ’s various findings regarding plaintiff’s 

failure to submit detailed financial information and documentary evidence in 

support of its claim, reasoning that the referenced information was not required by 

section 6 or the Department’s forms. 

¶ 26 The circuit court reversed the ruling of the Department, concluding that 

plaintiff, Citibank, was entitled to a refund pursuant to section 6 of the ROTA. The 

Department appealed. 

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¶ 27 Appellate Court Opinion 

¶ 28 The appellate court affirmed the judgment of the circuit court, holding that 

(1) the assignment of the right to pursue a refund of ROTA taxes paid was not 

precluded by the ROTA, (2) assignment was not precluded by public policy, (3) the 

failure to submit supporting documentation regarding the amount of ROTA taxes 

paid did not preclude a refund, based upon the stipulated facts, and (4) Citibank 

was in fact entitled to a refund. 2016 IL App (1st) 133650.4 

¶ 29 The appellate court found, “even if only remitting retailers have standing under 

the statute, the retailers in the present case effectively assigned their rights to 

pursue a refund to Citibank.” Id. ¶ 31. The appellate court cited, at the outset, this 

court’s opinion in Kleinwort Benson North America, Inc. v. Quantum Financial 

Services, Inc., 181 Ill. 2d 214, 225 (1998), wherein this court stated: “Today, 

assignability is the rule and nonassignability is the exception.” However, as the 

appellate court acknowledged (2016 IL App (1st) 133650, ¶ 32) and this court 

noted in Kleinwort (see Kleinwort, 181 Ill. 2d at 224), public policy is an important 

consideration in determining whether an action or right is assignable. 

¶ 30 In that regard, the appellate court first looked to section 6 to see if the statute 

prohibited or limited assignment of the right to a tax refund. The court found no 

overt restriction in the statutory language. The court stated: “Even if section 6 

bestows the right to a tax refund solely upon the remitter of the tax, that does not 

mean that after the initial bestowment, the remitter is not free to do what it pleases 

with that right.” 2016 IL App (1st) 133650, ¶ 36. The appellate court referenced 

this court’s decision in Stone, stating in an accompanying parenthetical, “because 

the language of the statute did not limit what could be done with a credit 

memorandum after it was issued or otherwise discuss its assignability, the credit 

memo was assignable.” Id. (citing Stone, 376 Ill. at 539). 

¶ 31 The court next addressed the Department’s argument that the assignment of a 

right to an ROTA tax refund violates public policy (1) because it could result in the 

refund of taxes not actually paid, leading to the unjust enrichment of persons who 

4

The appellate court’s disposition concerned consolidated appeals by Citibank and Chrysler 

Financial Services America, LLC. The appeal of the latter was dismissed for lack of jurisdiction and 

will not be further referenced here. 

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did not pay the taxes themselves, and (2) because Citibank was otherwise 

compensated through vendor discounts, cardholder charges, and interest payments. 

Id. ¶ 37. 

¶ 32 Speaking to the first concern, the appellate court acknowledged the 

Department’s contentions that mistakenly issued refunds are more likely where 

refunds are afforded to those outside “an existing taxpayer/collector relationship” 

and that Citbank’s claim, specifically, was inadequate insofar as Citibank had 

failed “to present documentation evidencing the transactions underlying the bad 

debts.” Id. However, the appellate court found the Department’s arguments in this 

case unavailing because, in the view of the appellate court, “any lack of 

documentation on the part of Citibank appears to have been a result of the parties’ 

stipulation to the amount of taxes attributable to the uncollected debt, not 

Citibank’s status as an assignee.” Id. In any event, looking to the future, the 

appellate court offered this assurance: “[T]he conclusion that the right to a refund 

under section 6 is assignable does not alter the procedural requirements a 

claimant—whether remitter or assignee—must comply with before a refund will be 

issued. Therefore, the Department is still free to vet applications for refunds in the 

same manner it always has.” Id. 

¶ 33 The appellate court found irrelevant the Department’s second concern, i.e., that 

Citibank—and other lenders similarly situated—are already adequately 

compensated for their bad debt risk through vendor discounts, cardholder charges, 

and interest payments. Id. ¶ 38. The court stated, “what constitutes fair 

compensation belongs to the parties to the agreement” and concluded “regardless 

of whether the vendor discounts, cardholder charges, and interest payments do, in 

fact, adequately compensate Citibank for the risks they [sic] run in financing 

purchases by consumers, it is inappropriate to invoke public policy to undo an 

agreement between the parties.” Id. 

¶ 34 Turning to the applicable administrative regulation—section 130.1960(d)—the 

appellate court considered and rejected the Department’s argument that Citibank is 

not entitled to a refund via the assignments because the retailers would not be 

entitled to a refund under the present circumstances. Id. ¶ 39. Before the appellate 

court, the Department argued, to take advantage of the bad debt credit of section 

130.1960(d), the retailer must have either financed the sale itself or have a “with 

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recourse” agreement with the lender. Id. The appellate court conceded the latter 

was inapplicable, as the agreement between Citibank and the retailers was without 

recourse. Id. ¶ 41. However, according to the appellate court, “[e]ven assuming that 

the bad debt credit regulation requires that a retailer self-finance, the parties’ 

stipulation indicates that is what happened here.” Id. The appellate court observed 

that the parties’ stipulations suggested “the retailers entered into financing 

agreements with the consumers directly and then sold and assigned their rights 

under those financing agreements to Citibank in exchange for payment of the 

financed amount.” Id. ¶ 42. 

¶ 35 The appellate court also rejected the Department’s contention that the retailers 

would not have been able to obtain a refund because there is no evidence that any of 

the ROTA taxes were refunded to the consumers. Id. ¶ 44. The court first pointed 

out that section 6 of the ROTA requires only that the claimant reimburse the 

purchaser for any amount of taxes actually “collected from the purchaser and 

retained by the claimant.” (Internal quotation marks omitted.) Id. ¶ 41. The court 

reiterated that the parties had stipulated that Citibank sought a refund only of 

ROTA taxes Citibank had paid but did not thereafter collect from the consumers 

due to the consumers’ defaults. The court noted that the retailers did not collect the 

tax amounts in question from the consumers; they collected them from Citibank. Id. 

Had there been “no deal with Citibank,” “the retailers would not have been required 

to refund to the consumers taxes that the consumers had not paid in the first place.” 

Id. ¶ 44. 

¶ 36 Finally, the appellate court found unavailing the Department’s contention that 

Citibank was not entitled to a refund because it failed to provide required 

information and documentation in support of its claim. Id. ¶ 46. Again, the 

appellate court resorted to the parties’ stipulation that the amount Citibank sought 

to have refunded was “the portion of balances that were written off as bad debts that 

is attributable to the Retailers’ Occupation Tax,” concluding, as a result of that 

stipulation, “[a]ny deficiency in Citibank’s application for refund or supporting 

documentation is moot.” Id. ¶¶ 46-47. 

¶ 37 The appellate court thus affirmed the judgment of the circuit court, holding that 

Citibank, pursuant to the retailers’ assignments, had a right to the refund claimed. 

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¶ 38 ANALYSIS 

¶ 39 The construction of a statute is a question of law that is reviewed de novo. In re 

Estate of Dierkes, 191 Ill. 2d 326, 330 (2000). In construing the meaning of a 

statute, this court’s primary objective is to ascertain and give effect to the intent of 

the legislature. In that regard, the language of the statute provides the best 

indication of the legislature’s intent. In re Consolidated Objections to Tax Levies of 

School District No. 205, 193 Ill. 2d 490, 496 (2000). Considerations of stare decisis 

weigh heavily in the area of statutory construction, especially where the legislature 

is free to change court interpretation of its legislation. People v. Reese, 2017 IL 

120011, ¶ 95. In the event there is ambiguity in a statute, we may look to other 

sources to ascertain the legislature’s intent. People ex rel. Birkett v. City of 

Chicago, 202 Ill. 2d 36, 46 (2002). In such an instance, this court will give 

substantial weight and deference to an interpretation of an ambiguous statute by the 

agency charged with administering and enforcing that statute. In fact, a reasonable 

construction of an ambiguous statute by the agency charged with that statute’s 

enforcement, if contemporaneous, consistent, long-continued, and in concurrence 

with legislative acquiescence, creates a presumption of correctness that is only 

slightly less persuasive than a judicial construction of the same act. Id. 

¶ 40 It has long been acknowledged that, in the absence of an authoritative statute, 

taxes voluntarily, though erroneously, paid cannot be recovered. Snyderman v. 

Isaacs, 31 Ill. 2d 192, 194 (1964). As stated in Stone, there is a “rule requiring strict 

construction of a tax refunding statute,” and that rule is “intended for the protection 

of the State.” Stone, 376 Ill. at 538. Thus, the refunding statute must specifically 

provide for the relief requested. 

¶ 41 Before this court, with respect to the interpretation of section 6 of the ROTA 

and section 130.1960(d), the parties’ arguments essentially mirror those advanced 

in the lower courts. Beyond the points raised below, the parties here argue the 

implications of section 6d of the ROTA as they relate to legislative intent and 

public policy, recognizing that amendment has no direct application to the refunds 

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sought in this case.5 The parties’ principal reliance upon this court’s precedent 

appears to focus on three cases: Kleinwort, Stone, and Snyderman. 

¶ 42 We begin with Kleinwort. In that case, this court considered whether punitive 

damages could be recovered by assignees after a common-law fraud claim brought 

by a corporation was assigned to the corporation’s former shareholders.6 This court 

ultimately held that the assignment of a punitive damages claim would not violate 

public policy. 

¶ 43 As referenced in the appellate court’s opinion in this case, the Kleinwort court 

announced, at the outset of its analysis, the modern view on assignability: “Today, 

assignability is the rule and nonassignability is the exception.” Kleinwort, 181 Ill. 

2d at 225 (citing 6 Am. Jur. 2d Assignments §§ 7, 29 (1963)). This court observed: 

“Basically, in Illinois, the only causes of action that are not assignable are torts for 

personal injuries and actions for other wrongs of a personal nature, such as those 

that involve the reputation or feelings of the injured party. [Citation.] These 

limitations are based primarily on public policy concerns.” Id. 

¶ 44 The Kleinwort court then enunciated “[s]ome general principles that determine 

when an agreement between parties violates public policy.” Id. at 226. The court 

noted, first and foremost, courts should look to Illinois’s constitution, its statutes, 

and the decisions of its courts because pronouncements of public policy are found 

therein. Beyond that inquiry, in deciding whether an agreement violates public 

policy, courts determine whether the agreement is so capable of producing harm 

that its enforcement would be contrary to the public interest. This court observed 

that courts should “apply a strict test in determining when an agreement violates 

public policy,” stating that “[t]he power to invalidate part or all of an agreement on 

the basis of public policy is used sparingly because private parties should not be 

needlessly hampered in their freedom to contract between themselves.” Id. The 

Kleinwort court noted whether an agreement is contrary to public policy depends 

on the particular facts and circumstances of the case. Id. 

5

Citibank’s 2010 claim for a refund or credit predates that section. Pub. Act 99-217 (eff. July 

31, 2015) (adding 35 ILCS 120/6d). 6

The right of assignees to recover compensatory damages was not contested, assuming same 

were proven. 

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¶ 45 Applying those considerations to the agreement in question, the Kleinwort 

court concluded “allowing the assignees to seek punitive damages does not violate 

any public policy.” Id. This court observed that the two assignees were 

shareholders of the assigning corporation at the time of the alleged fraud and they 

were “intimately involved in the negotiations for the purchase of [the brokerage 

firm at issue],” which served as the basis for the alleged fraud, and “[t]hey were 

involved in the litigation long before [the assigning corporation’s] claims were 

assigned to them.” Id. at 226-27. This court cited, approvingly, Puckett v. Empire 

Stove Co., 183 Ill. App. 3d 181, 191-92 (1989) (assignment of contribution claim 

did not violate public policy where assignee was closely involved in the events 

leading up to the litigation). Kleinwort, 181 Ill. 2d at 227. 

¶ 46 We turn now to consideration of this court’s decisions in Stone and Snyderman. 

Citibank argues that Stone dictates the result here; the Department argues that 

Snyderman controls. Neither case is directly on point; however, in view of the 

statutory taxing structure—including that of the refund statute—the observations in 

Snyderman are more compelling. 

¶ 47 At issue in Stone was whether the version of the ROTA refund statute then 

extant allowed assignment of a credit memorandum issued to the original remitter 

of ROTA taxes after a claim had been submitted to the Department by the original 

taxpayer, verified, and allowed. In Stone, the company that paid the taxes received 

a credit memorandum as a result of erroneous payment but ceased doing business 

and was thus no longer liable for the payment of ROTA taxes to which the credit 

amount could be applied. The memorandum, an asset of the company, was turned 

over to a trustee, who sold and assigned the memorandum. 

¶ 48 The Stone court began its analysis with the recognition that “[t]he result of 

erroneous payment of tax is that the State has in its possession funds which, in 

equity and justice, belong to the person erroneously paying it.” Stone, 376 Ill. at 

538. The court noted, at that time, the ROTA provided “nothing about 

[memorandum] assignment”; therefore, the court found that “assignability or 

non-assignability” should be “determined by the general law of assignability.” Id. 

at 539. In that respect, this court observed: “The general rule, in the absence of 

language of the statute prohibiting it, is that claims against the government are 

assignable.” Id. In holding that the credit memorandum was assignable, the Stone 

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court quoted, approvingly, from an Oklahoma decision, wherein that court stated: 

“ ‘The right to assign a debt which is due and fully earned is unquestioned by all the 

courts of this country, and even if the language “or his assigns” were not in the act, 

we entertain no doubt but what the party to whom the contract was let could assign 

any money due him under the same.’ ” (Emphases added.) Id. (quoting Leader 

Printing Co. v. Lowry, 59 P. 242, 245 (Okla. 1899)). 

¶ 49 Citibank asserts that Stone supports its position that a contingent right to a 

refund was assignable by its affiliated retailers. In our view, the holding of Stone is 

more limited: it stands for the proposition that—at a time when the pertinent statute 

did not otherwise address assignments—a credit memorandum, representing a 

liquidated right and amount as determined by the Department, was a property asset 

that could be assigned. 

¶ 50 In Snyderman, assignment and credit memoranda were not factors; this court 

considered whether there was a right to a refund under an entirely different 

scenario. In 1961, the ROTA and the complementary Use Tax Act were amended to 

apply to the rental of personal property and the use of rented personal property. In 

International Business Machines Corp. v. Department of Revenue, 25 Ill. 2d 503 

(1962), those amendments were held invalid because they violated section 13 of 

article IV of the constitution (Ill. Const. 1870, art. IV, § 13). Subsequently, plaintiff 

Snyderman brought an action on behalf of himself and others similarly situated 

who, during the period that the invalid tax was collected, had rented motor vehicles 

and paid the leasing tax, which was ultimately submitted to the Department by the 

lessors. Snyderman, 31 Ill. 2d at 193. Plaintiff submitted that he and the others had 

borne the burden of the tax. Id. 

¶ 51 The Snyderman court identified a principal issue presented as “whether under 

the facts alleged a lessee may maintain an action directly against the Director of 

Revenue to recover tax payments made through his lessor.” Id. at 194. As to that 

issue, the court first noted, “in the absence of an authoritative statute, taxes 

voluntarily, though erroneously, paid, cannot be recovered.” Id. 

¶ 52 With respect to these particular taxing statutes, the court explained that the 

“pattern of the taxing statutes contemplated that in the usual case the lessee would 

not himself remit the tax directly to the State, but would instead pay the amount of 

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the tax to his lessor as use tax,[7] and the lessor would remit the money to the State 

as retailers’ occupation tax.” Id. at 195. Given that statutory structure, the 

Snyderman court expressed concern that the “refund of a tax erroneously paid in 

such an indirect manner carries with it obvious possibilities of unjust enrichment, 

and the statutory procedures by which a refund or credit may be obtained show a 

legislative awareness of those possibilities.” Id. The court observed that both the 

ROTA and Use Tax Act (Ill. Rev. Stat. 1961, ch. 120, ¶ 439.19) contained similar 

provisions authorizing credit to the person who erroneously paid the tax in 

question. Id. at 195-96. The court continued: 

“In these provisions there is recognition of the possibility that the state may 

be unjustly enriched through the retention of taxes erroneously paid, and a 

remedy has been provided. There is recognition also that a refund procedure 

without safeguards might result in refunds of taxes that had not actually been 

remitted, or in the unjust enrichment of persons who had not themselves paid 

the tax, but had passed its burden on to another. To protect the real taxpayer and 

to prevent unjust enrichment of any other party, the legislature has provided 

both in the Use Tax Act and in the Retailers’ Occupation Tax Act that the only 

person entitled to receive credit is the remitter of the tax. And it has also 

required that where the remitter has not himself borne the burden of the tax, he 

must directly or indirectly reimburse the actual taxpayer before filing his claim 

with the Department.” Id. at 196. 

¶ 53 In the view of the court, the complaint made clear that the lessee-plaintiff did 

not remit the tax, and consequently, the “lessee has no statutory right to recover 

taxes remitted by his lessor. That conclusion necessarily makes applicable the 

general rule that without legislative authorization voluntary tax payments can not 

be recovered.” Id. 

7

As this court noted in Kean, the ROTA and Use Tax Act are complementary. Kean, 235 Ill. 2d 

at 362. “In the usual case, the use tax is collected from the purchaser by the retailer, who must remit 

the tax to the Department of Revenue. [Citations.] A retailer, however, is relieved of the duty of 

remitting the use tax it collects if it has paid to the Department the retailers’ occupation tax upon the 

gross receipts from the same sale.” Id. at 363. 

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¶ 54 The Department argues that Snyderman prohibits refunds to someone other 

than the remitter of the tax, even if the claimant-party was the actual source of the 

funds. 

¶ 55 We turn now to independent examination of the content of section 6 of the 

ROTA. As noted previously, at the time Stone was decided, the predecessor 

provision of section 6 (Ill. Rev. Stat. 1939, ch. 120, § 445) did not address 

assignment. It does now. After referencing issuance of a “credit memorandum or 

refund” “to the claimant,” in the same sentence, the statute provides, “(in the case 

of a credit memorandum) the credit memorandum may be assigned and set over by 

the lawful holder thereof, subject to reasonable rules of the Department, to any 

other person who is subject to this Act, the Use Tax Act, [or other specified taxes]” 

(35 ILCS 120/6 (West 2012)), i.e., those who might apply the credit to their future 

tax liability. With respect to assignability, the statute speaks only to a remitter’s 

present possession of a “credit memorandum,” an adjudicated claim, an asset in 

hand. Section 6 mentions both “retailers” and “claimants” at various points. The 

statute references “claimants,” generally, but refers specifically to “retailers” in two 

places: the term “retailer” is used in conjunction with the sale of motor vehicles, 

and it is used in the last paragraph of section 6 to differentiate a “retailer,” i.e., the 

seller of goods to the purchasing consumer, from the “vendor” who sold to the 

“retailer.” Id. However, the only “person” to whom “the Department shall issue a 

credit memorandum or refund” is “the person who made the erroneous payment,” 

i.e., the retailer. 

¶ 56 We next consider section 130.1960(d), the administrative regulation that was 

apparently promulgated by the Department to implement section 6. Subsection (d) 

addresses “bad debts,” a matter that is not mentioned in section 6 of the ROTA. 

Subsections (d)(1) and (d)(2) specifically mention “retailers”—in the first instance 

those who repossess and subsequently resell tangible personal property, in the latter 

those who incur bad debt without repossession—and subsection (d)(3) does not use 

the term “retailers.” However, it appears that subsection (d)(3) was intended, by the 

Department, to specify a means by which retailers who do not repossess may obtain 

tax relief. Moreover, and perhaps more significantly, via subsection (d)(3), the 

Department proffers a definition of a “tax paid in error” that the legislature had not 

used or specifically sanctioned, that is, a “tax paid on an account receivable that 

becomes a bad debt.” See 86 Ill. Adm. Code 130.1960(d)(3) (2000). The 

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Department’s regulation relating to bad debt remained the only applicable authority 

on the subject for a period of 15 years. 

¶ 57 Then, the legislature specifically addressed deductions for uncollectible debt 

and correlative tax relief in 2015 with the addition of section 6d to the ROTA. Pub. 

Act 99-217, § 15 (eff. July 31, 2015). By its terms, that section applies only to 

“accounts or receivables *** charged off as bad debt on the lender’s books and 

records on or after January 1, 2016” (35 ILCS 120/6d(b)(1)(A) (West 2016)), so it 

has no direct application here—and no one claims that it does. Rather, the parties 

argue its relevance with respect to legislative intent and public policy and attempt 

to spin it in such a way as to support their respective positions. 

¶ 58 The Department contends that the legislature’s recent authorization of ROTA 

relief for retailers who use “private-label credit cards” to finance a sale resulting in 

bad-debt expense does not support Citibank’s position because “Citibank was not a 

private label card lender” and it is not a “retailer.” The Department argues, with 

respect to the traditional lender-retailer financing relationship, the lender is 

otherwise compensated for risk. It does not provide its financing services for free to 

its merchants and cardholders, as merchants are typically required to discount their 

reimbursement requests to secure “non-recourse” financing from banks and 

purchasers often incur fees and/or pay interest on outstanding debt. The 

Department suggests that section 6d also reflects legislative concern over reporting 

problems that might be occasioned by third-party claims for refunds and the 

potential for unjust enrichment—a valid concern this court acknowledged in 

Snyderman. Thus, that section restricts refunds for bad debt to the retailer who 

made and financed the sale. The Department characterizes Citibank’s arguments as 

“an end-run around the legislative objectives of section 6d of the Act.” 

¶ 59 Citibank claims the addition of section 6d is an indication that “the legislature is 

continuing its policy of refunding excess sales tax in all credit sales so that the 

proper amount of sales tax is ultimately retained when bad debts occur.” Citibank 

suggests, without supporting reference, that the legislature was “undoubtedly 

aware of this litigation,” and Citibank finds it noteworthy that the legislature, in the 

new amendment, “did not take the opportunity” to “place any limitations on a 

retailer’s ability to assign its right to a tax refund.” It is not clear to us why the 

legislature would feel the need to limit an open-ended right of assignment to a 

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lender in the context of tax refunds when it has never recognized such a right in the 

first place. 

¶ 60 With respect to section 6d and its significance for purposes of ascertaining 

legislative intent and the parameters of public policy, we make the following 

observation. The statute authorizes tax relief only for “the retailer” and requires all 

reporting to the Department only through “the retailer.” 

¶ 61 Subsection (a) provides: 

“A retailer is relieved from liability for any tax that becomes due and payable if 

the tax is represented by amounts that are found to be worthless or 

uncollectible, have been charged off as bad debt on the retailer’s books and 

records in accordance with generally accepted accounting principles, and have 

been claimed as a deduction pursuant to Section 166 of the Internal Revenue 

Code on the income tax return filed by the retailer. A retailer that has 

previously paid such a tax may, under rules and regulations adopted by the 

Department, take as a deduction the amount charged off by the retailer. If these 

accounts are thereafter, in whole or in part, collected by the retailer, the amount 

collected shall be included in the first return filed after the collection, and the 

tax shall be paid with the return.” (Emphases added.) 35 ILCS 120/6d(a) (West 

2016). 

¶ 62 Subsection (b) addresses “the payment of taxes on purchases made through a 

private-label credit card”—not credit cards generally, “a private-label credit card.”8 

35 ILCS 120/6d(b) (West 2016). It provides, in subsection (b)(1), 

“[i]f consumer accounts or receivables are found to be worthless or 

uncollectible, the retailer may claim a deduction on a return in an amount equal 

to, or may obtain a refund of, the tax remitted by the retailer on the unpaid 

balance due if: 

8

A restrictive definition is provided in the statute, wherein a “ ‘[p]rivate-label credit card’ ” is 

defined as “a charge card or credit card that carries, refers to, or is branded with the name or logo of 

a retailer and may only be used to make purchases from that retailer or that retailer’s affiliates.” 35 

ILCS 120/6d(c)(3) (West 2016). 

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(A) the accounts or receivables have been charged off as bad debt on the 

lender’s books and records on or after January 1, 2016; 

(B) the accounts or receivables have been claimed as a deduction 

pursuant to Section 166 of the Internal Revenue Code on the federal income 

tax return filed by the lender; and 

(C) a deduction was not previously claimed and a refund was not 

previously allowed on that portion of the account or receivable.” (Emphases 

added.) 35 ILCS 120/6d(b)(1) (West 2016). 

¶ 63 Subsection (b)(2) mandates an accounting and reporting procedure to be 

employed in the event that either “the retailer or the lender subsequently collects, in 

whole or in part, the accounts or receivables for which a deduction or refund has 

been granted under paragraph (1),” and it is “the retailer [that] must include the 

taxable percentage of the amount collected in the first return filed after the 

collection and pay the tax on the portion of that amount for which a deduction or 

refund was granted.” (Emphasis added.) 35 ILCS 120/6d(b)(2) (West 2016). 

¶ 64 Though, in subsection (b)(5), the legislature requires both “[t]he retailer and 

lender” to “maintain adequate books, records, or other documentation supporting 

the charge off of the accounts or receivables for which a deduction was taken or a 

refund was claimed under this Section” (35 ILCS 120/6d(b)(5) (West 2016)), 

subsection (b)(5) specifies, immediately after announcing that requirement, that 

“[a] retailer claiming a deduction or refund for bad debts from purchases made 

using a private label credit card shall meet the same standard of documentation as a 

retailer that claims a deduction or refund for bad debts that are from purchases 

made not using a private label credit card.” (Emphasis added.) Id. It is not the 

lender who may claim a deduction (clearly not available to anyone who has no 

obligation to remit taxes in the future) or a refund; rather, it is the retailer who may 

do so, whether the sale was made using a private label credit card or not. In that 

vein, subsection (b)(4)(C) makes clear that the “deduction or refund allowed under 

this Section” “may only be taken by the taxpayer, or its successors, that filed the 

return and remitted tax on the original sale on which the deduction or refund claim 

is based.” (Emphases added.) 35 ILCS 120/6d(b)(4)(C) (West 2016). 

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¶ 65 Given the legislature’s clearly expressed preference in the statutory framework 

for reporting, remission, and refund only through the retailer, we find Citibank’s 

position untenable—indeed “an end-run around” the statutes enacted by the 

legislature. 

¶ 66 At the time Stone was decided, the pertinent statutory provision did not even 

mention assignments. After Stone, the legislature addressed assignments and 

sanctioned them only to the extent that a claim had been adjudicated and allowed, 

resulting in a “credit memorandum” issued to the taxpayer. In that instance only, 

the legislature provided for the taxpayer’s limited assignment of the memorandum 

“to any other person who is subject to this Act [or other specified tax acts].” 

(Emphasis added.) 35 ILCS 120/6 (West 2012). In other words, there could only be 

an assignment of a credit memorandum, and only to a taxpayer obligated to pay the 

Retailers’ Occupation Tax or the other referenced taxes, i.e., one who could use the 

“credit.” Although that right of assignment is mentioned, no mention was, or is, 

made of any other assignable, existing or prospective, right. Moreover, the statute 

is clear that a credit memorandum has to be in existence for the right of assignment 

to apply. Obviously, that limited statutory right of assignment is not applicable to 

the facts of this case. 

¶ 67 Then there is this court’s 1964 decision in Snyderman, which has occasioned no 

statutory change in the intervening years. We thus presume the legislature is in 

accord with this court’s interpretation of the statute. See Reese, 2017 IL 120011, 

¶ 95. In Snyderman, this court held that the lessee of property, the party who was 

the actual source of the money that found its way into state coffers, could not 

maintain his claim for a refund because the legislature had provided, in the ROTA, 

“the only person entitled to receive credit is the remitter of the tax.” Snyderman, 31 

Ill. 2d at 196. The statute still provides, given an appropriate claim, that “the 

Department shall issue a credit memorandum or refund to the person who made the 

erroneous payment.” (Emphasis added.) 35 ILCS 120/6 (West 2012). In other 

words, the payment or credit goes to the remitter of the tax. If the lessee in 

Snyderman, who was the source of the funds used to pay the tax, could not maintain 

an action for a refund, then it seems as clear that Citibank, in this case the source of 

the funds that the retailers remitted to the Department, is in no better position. A 

significant analytical thread that runs through Snyderman is the recognition that the 

legislature has insisted upon direct Departmental interaction with the original 

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remitter of the tax in refund matters because to proceed otherwise undermines 

statutory safeguards. 

¶ 68 The legislature has not only acquiesced in that interpretation over the 

intervening 64 years, it has now put its imprimatur upon that construction of 

statutory procedure. Section 6d of the ROTA not only confirms an element of the 

Department’s regulation that some might say sought to resolve a matter of statutory 

ambiguity—whether, for purposes of section 6, a “tax paid on an account 

receivable that becomes a bad debt *** becomes a tax paid in error” (see 86 Ill. 

Adm. Code 130.1960(d)(3) (2000))—it also makes abundantly clear that all refund 

or credit claims—whether on a bad debt or otherwise—go through the retailer, the 

original remitter of the tax. The ROTA is, after all, the Retailers’ Occupation Tax 

Act. It appears to us that allowing claims by the lender via assignment would 

circumvent the legislature’s statutory policy—recognized by this court as far back 

as at least the Snyderman decision—of requiring refund requests to be submitted 

through the remitter of the tax, so as to avoid reporting problems that might arise. 

We conclude it is not the intent of the legislature, as expressed in its statutory 

enactments, to allow a direct action for a refund by a lender against the Department 

under these circumstances. 

¶ 69 Our holding does not leave lenders like Citibank without a remedy in the future 

so long as they account for this circumstance in their agreements. Sophisticated 

lending institutions no doubt anticipate the eventuality of default and can order 

their commercial relationships accordingly. 

¶ 70 We note, in closing, that the legislature has broad latitude and discretion in 

drawing statutory classifications to benefit the general welfare. Big Sky Excavating, 

Inc. v. Illinois Bell Telephone Co., 217 Ill. 2d 221, 240 (2005). The responsibility 

for the wisdom of legislation rests with the legislature, and courts may not rewrite 

statutes to make them consistent with the court’s idea of orderliness and public 

policy. Board of Education of Roxana Community School District No. 1 v. 

Pollution Control Board, 2013 IL 115473, ¶ 25; People v. Carpenter, 228 Ill. 2d 

250, 270-71 (2008). Whether a windfall results in this circumstance—and it is far 

from clear that it does where tax is properly paid on the selling price—is not for us 

to decide. Our function is to ascertain the intent of the legislature as expressed in 

the language and framework of its statutory enactments. If this interpretation is not 

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what the legislature intended, we urge legislators to revisit this issue and make their 

intent manifest. 

¶ 71 For the foregoing reasons, the judgment of the appellate court is reversed. 

¶ 72 Reversed. 

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