## I L L I N O I S 

## O F F I C I A L 

## RE P O R T S Appellate Court

Witte Brot

hers Exchan ge, Inc. v. D epartm ent of Reve nue , 2013 IL App (1st) 120850

Appellate Court Caption WI TTE BROTH ERS EXCHANGE
, I NCORPOR ATED, PlaintiffAppellee
, v. THE DEPARTMENT OF REVENUE, BRIAN HAMER, as Direc tor of Revenue
, and DAN RUTHERFORD, as Trea su r e r o f th e State of I llinois , Def

endants-A

ppellants.

District & N o. First District, Six th Division Docke t No. 1-12-0850

Filed Rehea ring denied September 30, 2013

November

1, 2013

Held (Note : Thi s syl lab us

con st it u te s no par t of the opi nio n of the cour t but has bee n pre

par ed b y the Repo rt er o

f D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) I n an action arising from an income tax audit of plaintiff interstate trucking company , the appellate court reve rsed the trial court’s deter mination that t h e Depa rtment of Revenue could not tax the
company ’s “pass- throug h” miles, the miles driven throug h I l l i nois without picking up or deli v er i n g g oods, in apportioning the company ’s income to I llinois
, since plaintiff’s truc ks and employ ees had a phy sical and economic presen ce in I llinois while passing throug h; there fore
, the pass-throug h miles wer e “in this State” for purposes of the Income Tax Act.

Dec ision Under
Review Appeal from the Circuit Court of Cook County
, No. 11-L -50282; the Hon. Robert L opez Cepero, Judge , presiding

.

J udg ment Reverse d and re manded.Counsel on

Appea l L isa Madig an, Attorney Gene ral, of Chic ago (Michae l A. Scodro, Solicitor Gene ral, and L aura Wunde r, As sistant Attorney Gene ral, of counsel), f

or appe llants.

David M. Rownd and Br ittany E. Kirk, both of Thompson Coburn L L P, of Chicag o, for a

ppellee.

Panel J USTI CE REYES delivered the judg ment of the c ourt, with opinion. Presiding J ustice Rochford and J ustice Hall concur red in t h e j u dg ment and opinion.

OP INION

¶ 1 P l ai n t i ff

-a p p el l ee Wit te Br others Ex chang e, Inc. (Witt e Br others or p l ai n t i ff ), an inte rs t at e trucking company , initiated this action aga inst defe ndants-appe llants the I llinois Depa rtment of Revenue
, Br ian Hamer as its direc tor, and Dan Rutherford as Trea surer of the S t ate of I llinois (collec tively the Depa rtment) to rec over funds submitt ed under protest following an audit during which the Depa rtment conclude d Wit te Br others failed to include in the numerator of its apportionment fac tor the miles driven throug h I llinois without picking
up or delivering g oods, otherwise known as pass-thro u gh miles. The trial court g rante d 1 plaintiff’s motion for summary deter mination a

nd conclude d the Depa

rtment could not tax pass-throug h miles under s ec tion 304(d)( 1) of the I llinois Income Tax Act (Tax Act) (35 I L CS 5/304(d)(1) (West 2010)). The Depa rtment appea ls, contending the trial court err ed in
g ranting summary deter

mina t i o n beca

use the languag e of section 304(d)( 1) demonstrates pass-throu gh miles are reve nue miles “in this State,” and thus the appropr iate taxes wer e assessed in this matter. For the rea sons which follow, we reve rse the det er m i n ation of the trial court.

¶ 2 BA CKGROUND ¶ 3 I n 2009, the Depa rtment audited plaintiff for the tax y ear s ending September 30, 2005, S ep t ember 30, 2006, and September 30, 2007. On Dec ember 7, 2009, the Depa rt m en t forwa rded to plaintiff a

notice of proposed de ficienc y which stated pla intiff owed $77,281 in unpaid income tax pl u s a penalty of $11,592 beca use plaintiff failed to include pass-

“I n app ort ion ing the inc om e of m ult is ta te , uni ta ry bus ine sse s ope ra ti ng wit hin thi s st at e, 1
I ll ino is use s a for m

ula app roa ch known as ‘f ormula app ort ion m ent .’ Under thi s syste m , the inc om e of the bus ine ss is cal cul at ed, and a for m ula is app li ed to app ort ion tha t sum bas ed upon the ra ti o of the ta xpa yer’s act ivit ie s in I ll ino is to it s act ivit ie s everywher e.” Tex aco -Ci ti es Ser vi ce Pip el ine Co. v. M cGaw , 182 I ll . 2d 262, 274 (1 998)

.
-2-throug h miles in the numerator of the apportionment fac tor as require d in section 304(d)( 1)

of the Tax Act. The rele vant portion of sec tion 304(d)(1) states: “Such business income (other than that derive d from transportation by pipeline) shall be apportioned to this St at e b y m u l tiply ing such income by a fra ction, the numerator of which is the r eve nue miles of the person in this State , and the de nominator of which is the revenue mil es of the person every wher e. For purposes of t his para g raph, a reve nue mile is the transportation of 1 passeng er or 1 net ton of fre ight the distance of 1 mile for a conside ration.” ( Emphasis added.) 35 I L CS 5/ 304(d)( 1) (West 2010). ¶ 4 On J anuar

y 31, 20 1 1
, t h e I n fo rm al C onfer ence Boa rd rende red its decision that no amendments would be made to the plaintiff’s proposed tax adjustment. The decision stated: “The I CB conclude s the following : 1. In that Wit te Br os. Ex chang e, Inc. is car rying

on its interstate transportation service business in I llinois when passing throug h I llinois
, via I llinois highw ay s, ever y I llinois ‘pass-thr ou gh mile’ has nexus with I llinois

. The requisite nexus is s u p p l i ed if a corpor ation avails itself of the substantial privileg e of

car ry ing o n business within the t axing s tate. [ Citation.] Trave rsing I llinois
, via I llinois highw ay s, without an I llinois pick-up or delivery is the ex erc ise of t hat p ri v ileg e. 2. In that Wit te Br os. Ex chang e, Inc. derive d income from its customers while hauling fre ight

acr oss I llinois
, its I llinois ‘pass-thr oug h miles’ are ‘re venue miles of t he person in thi s State’ and are included in the Wit te Br os. Ex chang e, Inc. tra nsportation apportionment fac tor numera

tor as re quired by

35 I L CS 5/ 304(d)( 1).” ¶ 5 On Fe brua ry 8
, 2 0 1 1
, t h e Depa rtment forwa

rded to plaintiff a notice of audit results
reque sting pay

ment of $77,282 in unpaid taxes, $35,836 in interest, and $23,185 in penalties for a total pay

ment of $ 1 36,303. Plaintiff timely paid the assessment, but did so under protest. ¶ 6 On Marc h 16, 2011, plaintiff filed a complaint in the law division of the circ uit court of Cook County ag ainst the Depa rtment pursuant to the State Offic ers and Employ ees Money Disposition Act (Protest Monies Act) (30 I L CS 230/1 et seq. (West 2010)). Plaintiff soug ht

a preliminary injunction, abate ment of penalty fee s and interest, a deter mination that the income tax was err oneously assessed, and a decla ration that the Tax Delinquenc y Amnesty Act (35 I L CS 745/ 3-1 et seq. (West 2010)) is unconstitutional. 2 ¶ 7 The trial court g rante d plaintiff a preliminary injunction restra ining the Depa rtment from transfe rring plaintiff’s pay ment out of the protest fund pending a final dispositi on in the case

. Plaintiff then filed a motion for summary deter mination pursuant to section 2-1005(d) of the Code of Civil Procedu re (C o d e) (735 I L CS 5/2-1005(d) (West 2010)) seeking a ruling on whether the Depa

rtment used the proper method to calc ulate its I llinois tax liability

. Relying

on Northw est Airlines, Inc. v. Departm en t o f R ev enue , 295 I ll. App. 3d 889, 894 (1998),

Pla int if f fi le d a sup ple m ent al complai nt pur sua nt to t he Pro te st Mo nie s Act re gardi ng a n 2 add it ion al paym ent of $5,6 00 it was re qui re d to pay by the Depa rt m ent

. T he sup ple m ent al complai nt

con ta i n e d t w o a d dit ion al cou nts : a re que st for an inj unc ti on, whic h was grant ed; and a cl ai m

ass er ti ng s ect ion 3- 3(b

- 20) (2) of the Unif orm P ena lt y an d I nte re st Act (35 I LCS 735 /3-3(b- 20) (2) (W est 201 0)) is unc ons ti tut ion al , whi ch wa s wi thd ra wn.

-3-which ruled an airline was not require d to pay taxes under section 3 0 4 (d )( 1 ) when its

airplane s did not depar

t or land in I llinois
, but mere ly flew over the state, plaintiff maintained these fly over miles wer e identi ca l t o pass-throug h miles and there fore plaintiff corr ectly excluded these miles from the numerator of the apportionment fac tor. In compar ing fly over miles to pass-throug h miles, plaintiff argued the logic al result is that airplane s, which do not take off from or land in I llinois
, are not taxed for fly over miles. Therefo re , plaintiff conclude d, trucks which do not pick up or deliver g oods in I llinois should not be taxed on pass-throug h miles. Plaintiff further argued the I llinoi s G e n e r a l A s s e mb ly ’ s 2 0 0 7 a me n d me nt of section 304 of t h e T ax Act supports the argument that pass-throug h miles wer e not intended to be included in the numerator of the apportionment fac tor for taxes incurre d prior
to Dec ember 31, 2008, beca use the Gene ral Assembly added section 304(d)( 3), which expressly included pass-throug h miles a s miles dr iven in I llinois afte r De cembe r 31, 2008. ¶ 8 I n response , the Depa rtment contende d I llinois pass-throug h miles must be included in the numerator of the apportionment fac tor beca use the statute provides the numerator shall be “t h e revenue miles of the person in this State.” 35 I L CS 5/304(d)(1) (West 2010). A “re venue mile” is define d by the statute as the “tra nsportation of 1 passeng er or 1 net ton of fre ight the distance of 1 mile for a considera tion.” Id. The Department argued the purp ose of section 304(d)( 1) is to apportion t o I l l i n ois that part of a multis tate taxpay er’ s income ref lecti n g t h e amount of income ear ned in I llinois over the amount of income ear ned

ever y wher e. Ex cluding pass-throug h miles would cre ate “nowhe re income,” which is essentially income that i s t axed by no state and would be contra ry to the g oal of full apportionment. The Depa rtment distinguished the holding in Northw est Airlines
, arguing the

case was considered on constitu t ional g rounds and not based on the s tatutory construction of section 304(d)( 1). L astly
, the Depa rtment contende d the amendments to section 304 wer e clar ifications and a

ny other interpr etation would be c ontrary to full apportionment. ¶ 9 I n reply
, plaintiff asser ted the Gene ral As s em b l y cr ea t ed two distinct formulas whe n amending section 304 to include section 304(d)( 3). There fore
, plaintiff argued, it is ag ainst statutory construction and impossibl e for section 304(d)( 1) and section 304(d)( 3) to have the same interpr etation. ¶ 10 Af

t er t h e m at t er wa s fully briefe d, the trial court set plaintiff’s motion for summary deter mination for oral argument. On the date of hear ing, the trial court extended the briefing schedule , allowing both parties to file a supplemental re sponse and suppleme ntal reply

. 3 ¶ 11 The Depa

rtment’s sur-re sponse indicated the trial court instructed the parties to a ddress the meaning of t he phrase “in this State.” The Depa rtment responde d “in t his State” is not define d and there fore should be g iven its plain and ordinary meaning

. I t conclude d, “in this State” means miles driven on I llinois roads. Fur ther, the Depa

rtment compar ed the Tax Act’s use of “in t his State” to other statutes which use the s ame phrase and deter mined all m ean “in I llinois .” ¶ 12 Plaintiff’s sur-re ply contende d “in t his State” is a modi fier for the p h ra s e p recedingit,

No re cor d of pro cee din gs for any of the tr ia l cour t hear ings was incl ude d in the re cor d on 3
app eal

.
-4-“re venue miles of the person.” Thus, the question is not whether the trucks trave led “in this

State,” but whether plaintiff derive d reve nue from the pass-throug h miles. Plaintiff stated the

conce pt of “re venue miles” in se ction 304(d)( 1) applies only when the taxpay er is require d
to come into the state to pick up or deliver g oods. Plaintiff included these mil es in the

numerator of the a

pportionment fac tor. ¶ 13 On Februar

y 16, 2012, the trial court enter ed an order g ranting plaintiff’s moti o n an d stating “the I llinois Depa

rtment of Reve nue ca

nnot tax Pass-throug h Miles under 35 I L CS 5/304(d)(1) .” The preliminary injunction order s wer e dissolved and the State Trea surer was direc ted to return plaintiff’s funds submitt ed under protest. The trial court order was stay ed pending appea l. On Marc h 1 5
, 2 0 12, the Depa rtment timely filed this appea l. We have jurisdiction pursuant to I llinois Supreme Court Rule 301. I ll. S. Ct. R. 301 (ef f. Fe b. 1, 1994).

¶ 14 DI SCUS SI ON ¶ 15 I . I nterpre tation of Section 304(d)( 1) of the T ax Act ¶ 16 On appea l, the Depa rtment contends it corr ectly included plaintiff’s pass-throug h miles in the numerator of the apportionment fac tor as set forth in section 304(d)( 1) beca use passthroug h miles constitute reve nue miles “in this State.” 35 I L CS 5/304(d)(1) (West 2010). We revie w questions of law and statutory construction de novo

. Northw est Airlines
, 295 I ll. App. 3d at 892; National City Corp. & Subsidiaries v. Department of Revenue
, 366 I ll. App. 3d 37, 39 (2006). De novo consideration means we perf orm the same analy sis that a trial court would perf

orm. Khan v. BDO Se idman, LLP , 408 I ll. App. 3d 564, 578 (2011). ¶ 17 “Tax laws must be strictly construed; they must b e gi v en a re as o n ab l e construc tion, without b i as o r prejudice aga inst either the State or t he tax pay er, in order to eff ectuate t he intent of the leg islature.” Northw est Airlines
, 295 I ll. App. 3d at 892. Where there is doubt, the statute is “ ‘construe d most s t rongly ag ainst the g overnme nt and in favor of the taxpay er.’ ” Van’s Material Co. v. Departme nt of Rev enue , 131 I ll. 2d 196, 202 (1989) (quoting Mahon v. Nudelman , 377 I ll. 331, 335 (1941)). ¶ 18 We beg in by looking to the languag e of the statute, as this is the clea rest indicator of the leg islature’s intent. Northw est Airlines
, 295 I ll. App. 3d at 892. “I f the languag e is clea r and unambig uous, the statute will be construed acc ording to its terms, without resor ting to aids of construction.” Id. We must g ive the statutory languag e “its plain, ordinary
, and popularly understood mea

ning.” Alvarez v . Pappas , 229 I ll. 2d 217, 228 (2008). ¶ 19 Fo r t ax ab l e y ear s ending befor e Dec ember 31, 2008, the Tax Act require s bu s i n es s i n co m e d erive d from furnishing transportation service s be apportioned in the following

manner : “Such business income (other than that derive d from transportation by pipeline) shall be apportioned to this State by multipl ying such income by a fra ction, the n u me r a t o r of which is the r eve nue miles of the person in this State
, and the denominator of which is the revenue mil es of the person every wher e. For purposes of t his para g raph, a reve nue mile is the transportation of 1 passeng er or 1 net ton of fre ight the distance of 1 mile for

a considera

tion. Where a person is eng ag ed in the transportation of both passeng ers and fre ight, the fra ction above ref err ed to shall be deter

mined by means of an aver ag e of the

-5-passeng er reve nue mile fra ction and the fre ight reve nue mile fra ction, weig hted to ref lect the per son’s (A) relative railwa

y operating inco m e from total passeng er and total fre ight service
, as repor

ted to the Interstate Commerce Comm i ssion, in the case of transportation by

railroa d, and (B ) relative gross receipts from passeng er and fre ight transportation
, i n case of transportation other than by railroa d.” (Emphasis added.) 35 I L CS 5/304(d)(1) (West 2010). ¶ 20 This court has twice issued opinions considering the languag e of section 3 0 4 (d ) as i t relates to the ty

pe of miles it includes. At the time the trial court deter mined pass-throug h miles cannot be taxed unde r section 304(d)( 1), the only case law construing section 304(d)

was Northw est Airlines
, 295 I ll. App. 3d at 889. In Northw est Airlines
, we co n s i dere d whether section 304(d)( 1) provided that fly over miles must be included in the numerator of the apportionment fac tor. Id. at 892. There
, Northwe st Airlines contested the Depa rtment’s adjustment of the tax owed to include airplane trave l miles not involving takeof f or landing
, that is to say , miles flown over I llinois

. Id. at 891. The Depa rtment argued fly over miles wer e included in the apportionment fac tor as they flew in I llinois airspac e and this interpre tation fac ilitated 100% apportionment of taxes and was not pree mpted by fede ral law or a violation of the commerc e clause

. Id. I n construing “in this State” the Northw est Airlines court stated: “[T] he circ uit court initial l y d et ermined that, had the leg islature intended to include fly over miles in the apportionment numer at or, it would have used the appropr iate lang uag e–‘a

bove’ I llinois
, ‘over ’ I llinois
, or ‘in [I llinois ] air space .’ Since the leg islature
soug ht to include only those reve nue miles ‘in’ I llinois
, the court conclude d that fly over miles should be excluded. Howeve r, as the Department correc tly argues, all the airline mileag e at issue here is nece ssarily ‘over ’ this state, ‘above ’ this state, or ‘in [I llinois ] air
space .’ Thus, it is err oneous t o conclude that flyover mil es s h o u l d be ex cluded sim ply on the basis of a

n ‘in’ ver sus ‘over’ analy sis.” (Emphasis omitted.) Id. at 892-93. ¶ 21 The Northw est Airline s court went on to consider whether the statute, if interpre ted to include fly over mil es, would be unconstit utional. Id. at 893. I t concluded a n interpre tation of section 304(d) which included fly over miles would violate the commerc e clause as there

was a “ total absenc e of any nexu s b et we en the overf lights and this state.” (Emphasis in orig inal.) Id. at 893-94 (citing GTE Automatic Electric, Inc. v. Allphin
, 68 I ll. 2d 326, 340 (1977)) . Specifica lly : “[ T ] h e nexus require ment [of the commerc e clause of the United States Constit utio n ]
cannot be satisfied. Flig ht plans for overf lights are not filed with any I llinois state or municipal authorities. There are no voice communications with overf lights, and such flig hts make no use of I llinois fac iliti es, service s, or employ ees. There exis ts no phy sical
contac t betwee n overf

lights and this state, nor any economic connec tion. We do not find the mere possibili ty t h at an overf light will avail itself of service s and fac iliti es in this state in the eve nt of an unsche duled landing sufficie nt to establish a nexus.” Id. at 894. ¶ 22 Subsequent to the trial court’s deter mination, we issued Panhandle Eastern Pipeline Co.

v. Hamer
, 2012 I L App (1st) 113559. In Panhan d l e , we considere d the related issue of

-6-whether section 304(d)( 2) included “flow- throug h” miles of natura l g as in the numerator of

the apportionment fac tor. Id. ¶ 22. Section 304(d)( 2) uses substantially simil ar languag e as section 304(d) (1) to dete rmine the a pportionment fac tor: “Such business derive d from transportation by pipeline shall be apportioned to this State by multipl ying such income by a fraction, the numerator of which is the revenue miles of the person in this State
, and the denominator of which is th e re v en u e miles of the
person ever

y wher e. For the purposes of this p ar agr ap h
, a reve nue mile is the transportation by

pipeline of 1 ba

rre l of oil, 1,000 cubic fe et of g as, or of any specifie d quantity of any other substanc e, the distanc e of 1 mile for a consideration.” (Emphasis added.) 35 I L CS 5/ 304(d)( 2) (West 2010).
The Depa rtment of Revenue argued flow-through g as miles were proper ly included in the

numerator of the apportionment fac tor, wher eas Pan h an d l e contende d flow-through miles

wer e not “in t h i s S t at e” beca use the g as orig inated and terminated outside of I llinois

. P a nhandle
, 2012 I L App (1st) 113559 ¶ 26. Panhandle further argued “the word ‘in ’ d o es not mean ‘through,’ ” an argument which we stated “strains the natura l meaning of the statute and its leg islative purpose.” Id. ¶¶ 30, 31. We c oncluded “ ‘in’ also relates to a prese nce or exis tence . Thoug h not confined to I llinois , plaintiffs’ pipelines a nd the g as ar e pre sent and exis t in I llinois , as the flow- throug h miles transport natura l ga s by pipeline.” Id. ¶ 30. ¶ 23 The revie wing court also distinguished Northw est Airlines
, as the pipeline had a phy sical
prese nce in I ll in ois wher eas the airplane s, when flying over I llinois
, made no phy sical contac t with the state. Id. ¶ 40. Panhandle conce ded it had compre ssor st at i o n s wi t h in I llinois
, employ ed I llinois residents, and had perma nent ease ments. Id. Due to the phy sical prese nce of the pipeline itself, plaintiffs’ employ ees, and business operations in I llinois
, we ultimately conclude d flow-throug h miles wer e proper ly included in the numerator of the apportionment fac tor. Id. ¶ 41. 4 ¶ 24 At issue here is whether pass-throug h miles tra veled on be half of an interstate trucking
company in I llinois without picking up or delivering go o d s s h ould be included in the

num er at o r of t he apportionment fac tor of section 304(d)( 1). The Depa rtment contends the trial court err ed in deter mining section 304(d)( 1) of the Tax Act does not allow the Depa rtment to tax pass-throug h miles beca use pass-throug h miles are reve nue miles “in this State.” 35 I L CS 5/304 (d)(1) (West 2010). The Depa rtment arg

ues “in this State” means “miles with i n I l l i n ois’s border s.” There fore
, the miles driven by plaintiff throug h I llinois must be included in the numera tor of the a

pportionment fac tor. ¶ 25 Plaintiff does not provide this court with a definition of “in this State.” Instead, plaintiff

asser ts “in this Sta t e” ca n n o t be interpre ted without also examining its relationship to the phrase “re venue miles.” Plaintiff m ai n t ains the trial court corr ectly deter mined section 304(d)( 1) excluded pass-thr o u gh miles beca use the plain languag e of the statute allows taxation only of “re venue miles,” which the statute define s as “the transpor tation of 1
passe n ger o r 1 n et ton of fre ight the distance of 1 mile for a consideration.” 35 I L CS

We al so ana lyzed whet her the inc lus ion of fl ow

- th ro ug h m il es v iol at ed the comm er ce cl aus e 4 of the Uni te d St at es Cons ti tut ion and det er m ine d i t d id not

. Id. ¶ 55.

-7-5/304(d)(1) (West 2010). There fore
, when a truck passes throug h I llinois without picking up

or delivering passeng ers or fre ight, there is no consideration exchang ed in I llinois and, thus, it cannot be taxed on those miles. ¶ 26 Plaintiff attempts to distinguish pass -t h ro u gh m iles from the flow-through miles that

wer e proper ly included in the numerator of the apportionment fac tor in Panhandle

. Plaintiff

asser ts flow-throug h miles are fix ed in the land by pipelines and there fore the reve nue g ener ating activity (transpor ting g as) is firmly located in I llinois

. Plaintiff states, on the other hand, pass- throug h miles are not f ix ed bec ause pla intiff can decide whether or not to dr ive throug h I llinois when tra

nsporting its customer ’s g oods. ¶ 27 We conclude plaintiff’s pass-throug h miles establish a phy sical and economic prese nce in I llinois which must be taxed acc ording to section 304(d)( 1). P l ai n t iff’s contention, that phy sical prese nce must be fix ed with i n I l l i nois in order to be “in this State,” is found nowher e in our case law. In fac t, this court has previously deter mined the phrase “in th is State” is more broadly define d to include, not only being within I llinois border s, b u t also having a prese nce or exis tence in I llinois

. Panhandle
, 2012 I L App (1st) 113559, ¶ 30. This broad definition encompa sses not only the fac ts in Panhandle
, but also plaintiff whose trucks and employ ee s ar e phy sically prese nt in the state as they pass-throug h the boundarie s of I llinois

. J ust as the pipeline in Panh a ndle trave ls throug h I llinois
, plaintiff’s trucks trave l throug h I llinois on its roadw ay s. This is true whether or not plaintif f i s picking up or delivering g oods in I llinois

. By utiliz ing the state’s infr astructur e and r oadwa y s, plaintiff’s
p ro perty and employ ees are phy sically prese nt in I llinois

. Plaintiff is also conducting t h e economic activity of providi n g s h ip p in g s e r v ic es involving trave l throug h I llinois

. Moreove r, the rec o rd d emons trates plaintiff alleg ed it paid I llinois fuel tax, which indicates plaintiff
eng ag ed in additional economic activi t i es with I llinois suppliers. This phy sical prese nce, along with an economic connection, establishes pl aintiff is “in t h e S t ate.” See Panhandle
, 2012 I LApp (1st) 113559, ¶ 40. ¶ 28 Although the plaintiff is “in this State,” plaintiff contends pass-throug h miles cannot be included in numerator of the apportionment fac tor beca use they are n o t m iles g ener ating

reve nue in I llinois

. Plaintiff asser ts the statute define s “re venue miles” as those miles
trave led “for a considera

tion”; there fore
, if there is no consider at i o n exchang ed in I llinois those miles cannot b e taxed. I n other words, for I llinois to collect taxes on miles driven, plaintiff must g ener ate income from within I llinois

. Acc ording to plaint i ff
, pass-throug h miles do not g ener ate i n co m e and, thus, should not be included in the numera tor of the apportionment fa ctor. ¶ 29 As our supre me cour t has alre ady

deter mined, “the most fitting c onstruction of sec tion 304(d) would be to include all income ear ned from the business of furnishing transportation service s.” Texaco- Citi es Servic e Pipeline Co.
, 182 I ll. 2d at 276. The statute does not state,

as plaintiff sug g ests, that reve nue miles a re conditioned on the taxpay er g ener ating income from people or entities within I llinois

. The statute mere ly require s the miles be trave led “for

a consideration.” 35 I L CS 5/304(d)(1) (West 2010). The plain and ordinary m ea n i n g o f “conside ration” is “[s] omething (such as an act, a forbe ara nce, or a return promise) barg ained for and rec eived by a promisor from a promisee; that wh i ch m o t i v ates a person to do something, esp. to eng ag e in a leg al act.” Bla ck’s L aw Dictionary 347 (9th ed. 2009). When

-8-transporting g oods plaintiff rec eives monetary compensation in exchang e for its shipment

of those g oods to a particula r destinat i o n

. In relation to plaintiff’s business, the monetary compensatio n i s t h e consideration. Thus, it follows, as l ong as pl aintiff rece ives monetary compensation for it s s h ip p in g service s, pass-throug h miles must be included in the numerator of the apportionment fac tor beca use those miles wer e trave led in I llinois for a consideration. ¶ 30 Additional supp o rt fo r the inclusion of pass-throug h miles in section 304(d)( 1) come s from the purpose of the Tax Act itself. “The purpose of *** article 3 of the I llinois [I ncome Tax] Act i s t o assure that 100%, and no more or no less, of the business income of a corpor ation doing multis tate business is taxed by the States having jurisdicti o n t o tax it.” GTE
, 68 I ll. 2d at 335. I n Panhandle we stated the leg islative purpose of section 304(d) was to allow “I llinois to collect its share o f plaintiffs’ income tax under the apportionment fac tor.” Panhandle
, 2012 I L App (1st) 113559, ¶ 32. We deter mined not including flowthroug h miles would cre ate a g ap in taxation and there fore would be contra ry to the purpose of the statute. See id. The Depa rtment simil arly ma in

ta ins the inclusion of pass-throug h miles is nece ssary to avoid any g aps in taxation. We ag re e t h at t h i s interpre tation of the statute

acc omplishes the leg islative purpose of se ction 304(d). ¶ 31 Plaintiff f

urther a sserts the Ge nera l Assembly ’s addition of sec tion 304(d)(3) indicates pass-throug h miles wer e not intended to be included by the leg islature in the apportionment formula of

section 304(d) (1). ¶ 32 I n 2007, section 3 0 4 (d ) o f t h e T ax Ac t wa s amended with the addition of a new subsection which adopted a differ ent method for deter mining the apportionm ent fac tor. 5 Specifica lly
, the apportionment calc ulation would no longe r be based on reve nue miles, but instead on g ross rec eipts. The re levant portion of se ction 304(d)( 3) provides:
“F or taxable y ear s ending on or afte r Dec ember 31, 2008, business income derive d from providing transportation service s other than airline service s shall be apportioned to this State by using a fra ction, (a) the nu m erator of which shall be (i) all rec eipts from any movement or shipment of people, g oods, mail, oil, g as, or any other substance (other than by airline) that both orig inates and terminates in this S t at e, p l u s (i i) that portion of t he person’ s g ross rec eipts from movements or s h i p m en t s of people, g oods, mail, oil, g as, or any other substanc e (othe r than by airline) that orig inates in one state or jurisdiction and terminates in another state or juri s d i ct ion, that is deter mined by the ratio that the miles trave led i n t h i s S t ate bear s to total miles ever y wher e and (b) the denominator of which shall be all reve nue derive d from t h e m ovement or shipment of people, g oods, mail, oil, g as, or any other substance (other than by airline).” 35 I L CS 5/304(d)(3) (West 2010). ¶ 33 Plaintiff contend s t h e amendment of section 304(d) to expressly include pass- throug h miles in the apportionment fac tor demonstrates the Gene ral Assembly did not intend for the
pre- exis ting version of section 304(d)( 1) to include pass-throug h miles. We considere d and reje cted a n identical ar g ument in Panhandle :

T he st at ute was amended twi ce, the fi rs t amendm ent bei ng ef fe ct ive August 16, 2007

. T he 5

sec ond andcur re nt versi on wa s e ff ect ive J anu ar y 11, 200 8.

-9-“While section 304(d)( 3) clea rly includes any flow-through miles as part of the apportionment fa ct o r for tax y ear s 2008 and later, it does not apply to the tax y ear s at issue in this case

. Section 304(d)( 3) sets forth a new calc ulation o f t he apportionment fac tor. The apportionment fac tor no longe r uses ‘re v e n u e miles’ as the deter

mining fig ure for the apportionment fac tor, but instead calc ulates the apportionm en t fa ctor based on

rec eipts. The leg islature’s enac tment of a new method for calc ulating the apportionment fac tor, which expressly includes flow-through miles, does not mean that flow-throug h miles could not have been included in the numerator under section 304(d)( 2). Section 304(d)( 3)’s formu l a for calc ulating the apportionment fac tor has no eff ect on our construction of section 304(d)( 2). J ust beca use section 304(d)( 3) specific ally provides for the inclusion of flow-throug h miles, it does not follow that secti o n 3 0 4 (d )(2)’s apportionment fac tor excluded the miles.” Panhandle
, 2012 I L App (1st) 113559, ¶ 36.
J ust as we deter

mined flow-through miles wer e included in section 304(d)( 3) in Panhandle
, so too d o t h e parties here admit section 304(d)( 3) includes pass-throug h miles in the

numerator of the a

pportionment fac tor. As i n Panhandle
, section 304(d) (3) doe s not apply
to the prese nt case beca use we are also addre ssing taxes assessed pri o r t o 2008. As previously noted, section 304(d)( 2) and section 304(d)( 1) use substantially simil ar lang uag e. Acc ording ly
, we will follow the conclusion of our colleagues in Panhandle and find the addition of section 304(d)( 3) does not prec lude the inclusion of pass-throug h miles in section 304(d)( 1). See id. ¶ 34 For these rea sons, we conclude pass-throug h miles are “in this State,” as plaintiff’s trucks and employ ees maintained a phy sical and economic prese nce while driving throug h I llinois

.

¶ 35 I I . Commerce Clause ¶ 36 On appea l plaintiff asks us to consider whether the inclusion of pass-throug h miles in the

numerator of the apportionment fac tor would violate the commerc e clause of the United States Constitution (U.S. C o n st., art. I
, § 8, cl. 3). As plaintiff i nformed the trial court in a footnote to its motion for summary deter mination, if the trial court ruled in its favor on the issue of whether pass-through miles should be included in the numerator of the apportionment fac tor, then the court need not consider the commerc e clause issue. The trial 6 court, thus, did not addre ss or deter mine this issue. Although th e p l aint iff mentioned this

con tention in a para g raph of the complaint, plaintiff failed to alleg e a commerc e clause violati o n as a count. Additionally
, neither party set forth any arguments reg arding the

co m m er ce clause violation during the hearing on the motion for summary deter minat i o n

. Only on appea l did plaintiff fully addre ss and arg ue that section 304(d)( 1) violates the

commerc e clause

. I n reply
, the Depa rtment maintains we do not need to consider this issue,

T his same foo tno te al so st at ed the is sue of whet her pla int if f woul d be ass ess ed ta x pen al ti es 6 woul d be m oot if the tr ia l cou rt rul ed in it s fa vor. T his is sue was not add re sse d on app eal . Plai nti ff fur the r fa il ed to add re ss co u n t V o f it s complai nt re gardi ng the con st it uti ona li ty of the T ax Del inq uen cy Am

nes ty A c t (35 I LCS 735/ 3- 1 et seq

. (W est 2010 )) in the tr ia l cou rt and al so on app eal

.
-10-as the trial c ourt only addre ssed the statutory

interpre tation of section 304(d) (1). ¶ 37 “I t has fre quently been held that the theory upon which a case is tried in the lower c ourt cannot be chang ed on revie w, and that an issue not pres en t ed t o or considere d by the trial
court cannot be raised for the first time on revie w.” Kravis v

. Smith M arine, Inc.
, 60 I ll. 2d 141, 147 (1975). This rule is applicable to constitutional issues. Forest Preserv e District v. First Nat ional Bank of Franklin Park , 2011 I L110759, ¶ 27. Be cause of plaintiff’s f ailure to sufficiently

raise the issue in the trial court, this court de clines to addre ss it on appeal.

¶ 38 CONCL USI ON ¶ 39 For the afor ementioned rea sons, we reve rse the deter mination of the tr i al co u rt . The matter is re manded in ac corda nce w ith this opinion.

¶ 40 Reverse d and re manded.

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