Opinion ID: 2215507
Heading Depth: 1
Heading Rank: 6

Heading: Fair Relation to Services Provided by the State

Text: The fair relation prong of Complete Auto requires that the measure of the [use] tax be reasonably related to the taxpayer's presence or activities in the State. Jefferson Lines, 514 U.S. at ___, 115 S.Ct. at 1346, 131 L.Ed.2d at 281. However, the fair relation prong does not require a detailed accounting of the services provided to the taxpayer on account of the activity being taxed   . Jefferson Lines, 514 U.S. at ___, 115 S.Ct. at 1345, 131 L.Ed.2d at 281. Indeed, interstate commerce may be made to `contribute to the cost of providing all governmental services, including those services from which it arguably receives no direct benefit.' (Emphasis in original.) Goldberg, 488 U.S. at 267, 109 S.Ct. at 592, 102 L.Ed.2d at 620-21, quoting Commonwealth Edison Co. v. Montana, 453 U.S. 609, 627 n. 16, 101 S.Ct. 2946, 2958 n. 16, 69 L.Ed.2d 884, 900 n. 16 (1981). In the case at bar, the argument that the use tax is not fairly related to the services provided by Illinois is without merit. Illinois provides services which facilitate Brown's Furniture's sale of furniture within the State. Brown's Furniture benefits from public roads, police protection, a judicial system and all the other usual and usually forgotten advantages conferred by the State's maintenance of a civilized society   . Jefferson Lines, 514 U.S. at ___, 115 S.Ct. at 1346, 131 L.Ed.2d at 281. These benefits are related to the use tax collected on deliveries made by Brown's Furniture into Illinois and are justification[] enough for the collection of a tax. Jefferson Lines, 514 U.S. at ___, 115 S.Ct. at 1346, 131 L.Ed.2d at 281; see also D.H. Holmes, 486 U.S. at 32, 108 S.Ct. at 1624, 100 L.Ed.2d at 28. The application of the Act to Brown's Furniture satisfies the four prongs of the Complete Auto test. We therefore conclude that Brown's Furniture has failed to establish a violation of the commerce clause.
Brown's Furniture asserts that at the time of the audit period, the Department did not require other similarly situated Missouri retailers to collect Illinois use tax and, therefore, that the Department's targeting and singling out of Brown's Furniture denied it the equal protection of the laws. U.S. Const., amend. XIV; Ill. Const. 1970, art. I, § 2. In support of this position, Brown's Furniture points to a memo dated February 16, 1989, from the administrator of legal services at the Department to the manager of the audit bureau. The memo refers to the complaint made by Harvey's Furniture to Representative Mays and requests the audit department to follow up if a use tax return is not filed by Brown's Furniture in January 1989. Brown's Furniture also points to exhibits in the record which indicate that at the time of the audit period, none of its direct competitors had been audited by the Department. It has long been established that the guarantee of equal protection applies not only to facial legislative classifications, but also to the administration of laws as well. See, e.g., Yick Wo v. Hopkins, 118 U.S. 356, 6 S.Ct. 1064, 30 L.Ed. 220 (1886); Kerasotes Rialto Theater Corp. v. City of Peoria, 77 Ill.2d 491, 498-99, 34 Ill.Dec. 118, 397 N.E.2d 790 (1979). Thus, it has been held that principles of equal protection are violated when the selective enforcement of a statute is deliberately based upon an unjustifiable standard such as race, religion, or other arbitrary classification. Oyler v. Boles, 368 U.S. 448, 456, 82 S.Ct. 501, 506, 7 L.Ed.2d 446, 453 (1962). However, so long as a statute is rationally based, the conscious exercise of some selectivity in enforcement is not in itself a federal constitutional violation. Oyler, 368 U.S. at 456, 82 S.Ct. at 506, 7 L.Ed.2d at 453; cf. Wayte v. United States, 470 U.S. 598, 608, 105 S.Ct. 1524, 1531, 84 L.Ed.2d 547, 556 (1985); United States v. Batchelder, 442 U.S. 114, 125, 99 S.Ct. 2198, 2205, 60 L.Ed.2d 755, 765-66 (1979); Dandridge v. Williams, 397 U.S. 471, 486-87, 90 S.Ct. 1153, 1162-63, 25 L.Ed.2d 491, 502-03 (1970); see also Jacobs v. City of Chicago, 53 Ill.2d 421, 427, 292 N.E.2d 401 (1973). Brown's Furniture offers no evidence to suggest that it was targeted by the Department for an invidious reason, such as race, religion, or political beliefs. Moreover, in light of its decision to stop remitting the use tax after collecting it for two years, we are not persuaded by the argument of Brown's Furniture that the Department had no rational basis for undertaking the 1989 audit. The Department's legitimate objective of collecting revenue, coupled with its finite resources, necessarily requires it to exercise some discretion in selecting which tax collector to audit. The exercise of that discretion in the case at bar was neither discriminatory nor arbitrary. Therefore, we conclude that Brown's Furniture's equal protection claim is without merit.
Brown's Furniture contends that the Department should be estopped from collecting the use tax and, mirroring the circuit court's reasoning, offers two justifications for such an estoppel. First, Brown's Furniture alleges that its vice-president, Jim Brown, was told in a phone conversation with the Department's tax service desk on December 30, 1988, that Brown's Furniture was not required to collect the tax. Second, Brown's Furniture notes that during its contacts with the Department it continuously received differing explanations of why its activities in Illinois required it to collect the use tax. Generally, the doctrine of equitable estoppel may be invoked when a party reasonably and detrimentally relies on the words or conduct of another. Dill v. Widman, 413 Ill. 448, 455-56, 109 N.E.2d 765 (1952). However, against the State, estoppel is applied only to prevent fraud and injustice, and this is especially true when the public revenues are involved. Jack Bradley, Inc. v. Department of Employment Security, 146 Ill.2d 61, 81, 165 Ill.Dec. 727, 585 N.E.2d 123 (1991); Rockford Life Insurance Co. v. Department of Revenue, 112 Ill.2d 174, 185-86, 97 Ill.Dec. 405, 492 N.E.2d 1278 (1986). This court's reluctance to apply the doctrine of estoppel against the State has been motivated by the concern that doing so may impair the functioning of the State in the discharge of its government functions, and that valuable public interests may be jeopardized or lost by the negligence, mistakes or inattention of public officials. Hickey v. Illinois Central R.R. Co., 35 Ill.2d 427, 447-48, 220 N.E.2d 415 (1966). Reflecting these policy concerns in the revenue collection context, this court has refused to estop the State from reexamining a taxpayer's liability even when returns for the relevant tax period have been filed and approved. People ex rel. Scott v. Chicago Thoroughbred Enterprises, Inc., 56 Ill.2d 210, 306 N.E.2d 7 (1973); Austin Liquor Mart, Inc. v. Department of Revenue, 51 Ill.2d 1, 280 N.E.2d 437 (1972). Similarly, this court has held that the Department was not estopped from taxing certain securities which, under a previous Department policy, had been exempt from taxation. Rockford Life Insurance, 112 Ill.2d 174, 97 Ill.Dec. 405, 492 N.E.2d 1278; see also Jack Bradley, 146 Ill.2d at 81, 165 Ill.Dec. 727, 585 N.E.2d 123. In the case at bar, the facts are insufficient to warrant application of estoppel against the State. According to Jim Brown's testimony, the Department employee to whom he spoke on the phone was unaware of the extent of the store's activities in Illinois. Under the general rule, estoppel cannot be asserted against a party not having knowledge of all relevant facts. Dill, 413 Ill. at 455-56, 109 N.E.2d 765; 31 C.J.S. Estoppel § 70 (1964). The State is not estopped by the mistakes made or misinformation given by the Department's employees with respect to tax liabilities. Austin Liquor Mart, 51 Ill.2d at 5, 280 N.E.2d 437. Therefore, it would be inappropriate to impose the doctrine against the Department on the basis of the phone conversation. See also Good's Furniture, 382 N.W.2d at 150-51. With respect to the Department's changing justifications for collecting the tax, we agree that they varied throughout the course of its dealings with Brown's Furniture. Although we do not condone the Department's failure to provide Brown's Furniture with an explanation of why its activities created a substantial nexus with Illinois, [2] the Department was consistent in its determinations that Brown's Furniture was obligated to collect the use tax. In both its letter of October 9, 1984, and its letter of April 8, 1986, the Department explicitly concluded that Brown's Furniture was required to collect the use tax. Thus, regardless of the Department's changing rationales, there is no evidence to suggest that it fraudulently or unjustly misled Brown's Furniture into not collecting the tax. Therefore, under the circumstances presented here, the Department cannot be estopped from collecting the use tax.
Brown's Furniture argues that the Department's application of the Act rendered it special legislation in all practicality. In support of this assertion, Brown's Furniture points to testimony given in an evidence deposition by State Senator Laura Donahue. Senator Donahue testified that she represents the 48th District, which includes the City of Quincy, and that she sponsored the 1985 amendment to the Act. The Senator also testified that Harvey's Furniture had complained to her about the failure of Brown's Furniture to collect the tax and that in the course of sponsoring the amendment, she cited Brown's Furniture as an example of an out-of-state retailer who was not collecting Illinois use tax. Senator Donahue further stated that the amendment was meant to have a general application and that it was not limited to Missouri or to retail furniture stores. In addition, the Senator testified that while working to pass the legislation, Senators from other border districts had cited examples of out-of-state retailers performing activities similar to Brown's Furniture to illustrate the problems the amendment was meant to address. Based on Senator Donahue's testimony, Brown's Furniture contends that it was singled out, and that the Act, as applied, was special legislation. We disagree. The special legislation section of the Illinois Constitution provides: The General Assembly shall pass no special or local law when a general law is or can be made applicable. Whether a general law is or can be made applicable shall be a matter for judicial determination. Ill. Const. 1970, art. IV, § 13. This provision prohibits the General Assembly from conferring a special benefit or exclusive privilege on a person or class to the exclusion of others similarly situated. In re Petition of the Village of Vernon Hills, 168 Ill.2d 117, 122, 212 Ill.Dec. 883, 658 N.E.2d 365 (1995). The provision does not proscribe all legislative classifications, only those which arbitrarily, and without a sound, reasonable basis discriminate in favor of a select group. Illinois Polygraph Society v. Pellicano, 83 Ill.2d 130, 137-38, 46 Ill.Dec. 574, 414 N.E.2d 458 (1980). Brown's Furniture cites to no authority in support of its argument that the selective application of a statute by an administrative agency renders that statute special legislation. Assuming, arguendo, that Brown's Furniture's proposition is correct, and that the application in the instant case benefited a select group (presumably those Missouri furniture retailers not audited), Brown's Furniture has nevertheless failed to show that the Department's application of the Act converted it to special legislation. A special legislation challenge generally is judged under the same standards applicable to an equal protection challenge. Village of Vernon Hills, 168 Ill.2d at 123, 212 Ill.Dec. 883, 658 N.E.2d 365; see generally Anderson v. Wagner, 79 Ill.2d 295, 37 Ill.Dec. 558, 402 N.E.2d 560 (1979). As discussed previously, the Department's audit of Brown's Furniture was neither discriminatory nor arbitrary and hence did not contravene principles of equal protection. For the foregoing reasons the judgment of the circuit court is reversed and the cause is remanded for further proceedings consistent with this opinion. Reversed and remanded.