Court Opinion

ID: 2643362
Source: CourtListenerOpinion
Date Created: 2013-11-21 15:33:25.107724+00
Date Added: 2024-06-11T11:13:52.788076
License: Public Domain

2013 IL 115130

                            IN THE
                       SUPREME COURT
                              OF
                     THE STATE OF ILLINOIS

                (Docket Nos. 115130, 115131 cons.)
     HARTNEY FUEL OIL COMPANY et al., Appellees, v. BRIAN A.
     HAMER, Director of the Illinois Department of Revenue, et al.,
                             Appellants.

                      Opinion filed November 21, 2013.

        CHIEF JUSTICE GARMAN delivered the judgment of the court,
     with opinion.
        Justices Freeman, Thomas, Kilbride, Karmeier, Burke, and Theis
     concurred in the judgment and opinion.

                                  OPINION

¶1       This case concerns the proper situs for tax liability under retail
     occupation taxes arising under three Illinois statutes: the Home Rule
     County Retailers’ Occupation Tax Law, the Home Rule Municipal
     Retailers’ Occupation Tax Act, and the Regional Transportation
     Authority Act. The Illinois Department of Revenue determined
     through audit that plaintiff Hartney Fuel Oil Company’s sales at retail
     were attributable to the company’s Forest View office, rather than the
     Village of Mark location reported by the company. The change in
     location made Hartney subject to retail occupation taxes imposed by
     the Village of Forest View, Cook County, and the Regional
     Transportation Authority. The Department issued a notice of tax
     liability, which Hartney paid under protest. Hartney then filed for
     relief in the circuit court of Putnam County.
¶2       The circuit court of Putnam County consolidated with this case a
     declaratory judgment action by the board of commissioners of
     Putnam County and board of trustees of the Village of Mark, in which
     those local governments sought to be declared the proper situs of
     taxation. The circuit court also allowed the board of trustees of the
     Village of Forest View, the County of Cook, and the Regional
     Transportation Authority to intervene as defendants. The circuit court,
     interpreting the Department of Revenue’s regulations for the three
     taxes, found for the plaintiffs. The appellate court affirmed that
     decision. 2012 IL App (3d) 110144.
¶3       We granted defendants’ petitions for leave to appeal pursuant to
     Supreme Court Rule 315 (eff. Feb. 26, 2010). Pursuant to Supreme
     Court Rule 345 (eff. Sept. 20, 2010), we have permitted the
     Taxpayers’ Federation of Illinois and the Illinois Retail Merchants
     Association to file a brief amicus curiae on behalf of the plaintiffs.
     We have also permitted the Village of Schaumburg, the City of
     Chicago, the City of Peoria, the Town of Normal, and the County of
     Peoria to file a brief amicus curiae on behalf of the defendants.

¶4                               BACKGROUND
¶5        Hartney Fuel Oil Company is a retailer of fuel oil, and during all
     times relevant to this litigation its home office was in Forest View,
     Illinois. From its Forest View office, Hartney would set fuel prices,
     cultivate customer relationships, and handle administrative tasks like
     billing and accounting. Each night, Hartney staff there would
     communicate fuel prices for the following day to prospective
     customers. The Forest View home office also contained a jointly
     owned but separately incorporated transportation company, Energy
     Transport, Inc. Energy Transport served as a common carrier, filling
     many of Hartney’s fuel orders.
¶6        In addition to its Forest View office, Hartney had a “sales” office,
     located elsewhere in the state for tax planning purposes. The sales
     office had no direct employee of Hartney; Hartney would contract
     with a local business for a clerk to take fuel orders. Hartney
     established its first separate sales office in Elmhurst, later moving it
     to Burr Ridge, then to Peru, and then to Mark, due to prevailing local
     tax conditions. The local business would provide the services of one
     of its own employees to receive Hartney’s orders via phone; Hartney
     would pay the local business a flat rate. During the relevant time
     period, Hartney paid Putnam County Painting, a commercial painting
     business, $1,000 per month for a nonexclusive lease of 200 square
     feet and the services of a clerk.
¶7        Hartney had two varieties of fuel contracts, long-term
     requirements contracts and daily orders. Customers would call the

                                       -2-
     Mark office to place their daily orders. Any customer who called the
     Forest View office to place an order was directed to call the Mark
     office. The clerk in Mark would check a list of customers with
     approval to order on credit. Orders from those who were not credit-
     approved would be rejected. For customers who were preapproved,
     the clerk would call Energy Transport at the Forest View office, and
     Energy Transport would deliver the fuel. No confirmation of the order
     by Hartney’s Forest View office was required. Testimony at trial and
     the conclusion of the circuit court were that the clerk’s word was
     binding on Hartney.
¶8        Long-term requirements contracts were negotiated by Hartney’s
     president, who would instruct the customer to sign the contract and
     return it by mail to the Mark office. If Hartney’s president had not yet
     signed the contract, he would travel to the Mark office to sign it. The
     executed contracts were stored at the Mark office, with copies sent to
     the customer and Hartney’s Forest View office. These contracts were
     generally on a “keep full” basis. Energy Transport or another common
     carrier would monitor and keep full the customer’s tanks, notifying
     Hartney to invoice the long-term contract customer for any fuel
     delivered. The keep-full arrangements did not require any
     intervention by the Mark office.
¶9        By structuring its sales in this way, Hartney hoped to avoid
     liability for retail occupation taxes of Cook County, the Village of
     Forest View, and the Regional Transportation Authority. Such taxes
     are imposed pursuant to the Home Rule County Retailers’ Occupation
     Tax Law (55 ILCS 5/5-1006 (West 2012)), the Home Rule Municipal
     Retailers’ Occupation Tax Act (65 ILCS 5/8-11-1 (West 2012)), and
     the Regional Transportation Authority Act (70 ILCS 3615/4.03 (West
     2012)). Hartney’s interpretation of the law was that the relevant
     regulations set a bright-line test: where the purchase order is accepted
     for a sale at retail in Illinois, and the purchaser takes delivery in
     Illinois, the sale has its situs where the seller accepts the purchase
     order. This view of the situs of sale also meant that Putnam County
     and the Village of Mark received the portions of the Illinois Retailers’
     Occupation Tax funds designated for county and local government.1
     35 ILCS 120/3 (West 2012).

         1
           Neither Putnam County nor the Village of Mark imposed its own retail
     occupation taxes, and each gave Hartney a partial rebate of state retail
     occupation tax funds received, giving Hartney an even lower effective tax
     rate for sales with situs there.

                                        -3-
¶ 10       The Department of Revenue audited Hartney’s selling activity
       from January 1, 2005, to June 30, 2007, finding the proper situs of
       selling activity to be Hartney’s office in Forest View. The Department
       calculated retail occupational taxes of Cook County, Forest View, and
       the Regional Transportation Authority, and sent Hartney a notice of
       tax liability on September 5, 2008. With interest and penalties,
       Hartney owed $23,111,939.11.
¶ 11       Hartney paid the assessment and sued for a refund under the State
       Officers and Employees Money Disposition Act (Protest Monies Act)
       (30 ILCS 230/1 et seq. (West 2008)) in Putnam County circuit court.
       Putnam County and the Village of Mark joined Hartney in seeking
       declaratory and injunctive relief to find Mark to be the proper situs of
       sale, to release the state occupation tax money to Mark and Putnam
       County, and to release to Hartney the money it paid under protest.
       Forest View, Cook County, and the Regional Transportation
       Authority (Local Governments) intervened as defendants.
¶ 12       The circuit court concluded that Hartney had accepted both its
       long-term sales and daily order sales in the Village of Mark, and that
       the regulations relevant to each section established a bright-line test
       for situs of sale: where purchase orders are accepted, tax liability is
       incurred. The appellate court affirmed.

¶ 13                                 ANALYSIS
¶ 14       The issues presented by this appeal are (1) the legislative intent of
       the retail occupation tax statutes, and (2) interpretation of the
       administrative regulations implementing the retail occupation taxes.
¶ 15       Hartney argues, and the courts below found, that the plain
       language of the regulation establishes a bright-line test for the situs
       of retail occupation tax liability. The Department argues that such an
       interpretation is at odds with this court’s decisions on the business of
       selling under the retail occupation tax and with the legislative intent
       of the Home Rule County Retailers’ Occupation Tax Law (55 ILCS
       5/5-1006 (West 2012)), the Home Rule Municipal Retailers’
       Occupation Tax Act (65 ILCS 5/8-11-1 (West 2012)), and the
       Regional Transportation Authority Act (70 ILCS 3615/4.03 (West
       2012)).
¶ 16       This appeal concerns interpretation of statutes and regulations,
       both questions of law which we review de novo. People ex rel.
       Madigan v. Illinois Commerce Comm’n, 231 Ill. 2d 370, 380 (2008).
       Yet even where review is de novo, an agency’s interpretation of its
       regulations and enabling statute are “entitled to substantial weight and

                                         -4-
       deference,” given that “agencies make informed judgments on the
       issues based upon their experience and expertise and serve as an
       informed source for ascertaining the legislature’s intent.” Provena
       Covenant Medical Center v. Department of Revenue, 236 Ill. 2d 368,
       387 n.9 (2010).
¶ 17       Factual determinations of a trial court are reviewed under the
       manifest weight of the evidence standard and will be reversed only
       where the “opposite conclusion is clearly evident or the finding is
       arbitrary, unreasonable, or not based in evidence.” Samour, Inc. v.
       Board of Election Commissioners, 224 Ill. 2d 530, 544 (2007). The
       parties disagree about the legal significance of a number of facts in
       issue but do not dispute the facts themselves.
¶ 18       This dispute arises under the Protest Monies Act (30 ILCS 230/1
       (West 2008)). A taxpayer willing to pay an assessment under protest
       may pay assessed taxes and file suit for a refund in circuit court,
       thereby avoiding the requirement under the Administrative Review
       Law (735 ILCS 5/3-101 et seq. (West 2008)) to exhaust all
       administrative remedies before seeking judicial review.2

¶ 19                  The Local Retail Occupation Tax Acts
¶ 20      The three statutes at issue (the local ROT Acts) allow home rule
       county and municipal governments and the Regional Transportation
       Authority (RTA) to impose a retail occupation tax “upon all persons
       engaged in the business of selling tangible personal property” at retail
       within the county, municipality, or metropolitan region. 55 ILCS 5/5-
       1006 (West 2012); 65 ILCS 5/8-11-1 (West 2012); 70 ILCS
       3615/4.03(e) (West 2012). The Village of Forest View is within Cook
       County and within the metropolitan region of the RTA. Each of the
       Local Governments has imposed its own retail occupation tax.
¶ 21      The local ROT Acts give information about the tax rate to be
       imposed and types of products subject to the tax, but—with the
       exception of coal and other mineral extraction—they do not offer
       substantial guidance on the proper situs of taxation. See, e.g., 55
       ILCS 5/5-1106 (West 2012). For guidance on the proper situs of retail

           2
             The appellate court noted that this court has not yet identified the
       standards to apply to a specific claim under the Protest Monies Act. 2012
IL App (3d) 110144, ¶ 32. However, the parties are in apparent agreement
       that the circuit court's standard was appropriate, and no party has briefed
       or argued the issue for this court's review. We do not define a standard at
       this time.

                                          -5-
       occupation tax under the local ROT Acts, one must turn to the
       regulations. The “Jurisdictional Questions” regulations for the county,
       municipality, and RTA retail occupation taxes are largely identical,
       with only minor differences in layout. See 86 Ill. Adm. Code 220.115
       (2000); 86 Ill. Adm. Code 270.115 (2000); 86 Ill. Adm. Code
       320.115 (2000). For simplicity, we refer to the Home Rule County
       Retailers’ Occupation Tax Law regulations (86 Ill. Adm. Code
       220.115 (2000)).
¶ 22       The circuit court and appellate court both found the regulations to
       establish a bright-line test: “If the purchase order is accepted at the
       seller’s place of business within the county, municipality and/or
       metropolitan region; ROT liability is fixed in that respective county,
       municipality and/or metropolitan region.” 2012 IL App (3d) 110144,
       ¶ 53. The Department and Local Governments argue that the
       regulations instead present a fact-intensive inquiry, looking to the
       totality of the circumstances. They argue that only a totality-of-the-
       circumstances view accords with the legislative intent of the local
       ROT Acts and this court’s prior interpretation of the “business of
       selling” under the local ROT Acts. See, e.g., Ex-Cell-O Corp. v.
       McKibbin, 383 Ill. 316 (1943).
¶ 23       We look first to interpretation of the statutes, beginning with plain
       language.

¶ 24                        Interpretation of the Statutes
¶ 25       When interpreting a statute, the primary objective is to give effect
       to the legislature’s intent, which is best indicated by the plain and
       ordinary language of the statute itself. Citizens Opposing Pollution v.
       ExxonMobil Coal U.S.A., 2012 IL 111286, ¶ 23. Words should be
       given their plain and obvious meaning unless the legislative act
       changes that meaning. Svithiod Singing Club v. McKibbin, 381 Ill.
194, 197 (1942). In giving meaning to the words and clauses of a
       statute, no part should be rendered superfluous. Standard Mutual
       Insurance Co. v. Lay, 2013 IL 114617, ¶ 26. Statutory provisions
       should be read in concert and harmonized. People v. Rinehart, 2012
IL 111719, ¶ 26. Where a statute is enacted after a judicial opinion is
       published, we presume the legislature acted with knowledge of the
       case law. In re Marriage of Mathis, 2012 IL 113496, ¶ 25. If further
       construction of a statute is necessary, a court may consider similar
       and related enactments. In re Shelby R., 2013 IL 114994, ¶ 39. Courts
       weighing legislative intent also consider the “object to be attained, or
       the evil to be remedied by the act.” Svithiod Singing Club, 381 Ill. at

                                         -6-
       198. A retail occupation tax must be given a “practical and common-
       sense construction.” Automatic Voting Machine Corp. v. Daley, 409
Ill. 438, 447 (1951).
¶ 26        The principal question in this appeal is determination of the
       proper situs for the “business of selling” to be taxed. To interpret a
       statute, we first look to the plain language of that statute. Neither
       party has briefed or argued the plain language of the local ROT Acts,
       aside from pointing to this court’s prior decisions on the meaning of
       the “business of selling.”
¶ 27        The Home Rule County Retailers’ Tax Law permits home rule
       counties to impose “a tax upon all persons engaged in the business of
       selling tangible personal property *** at retail in the county.” 55
       ILCS 5/5-1006 (West 2012). The tax is to be imposed in 1/4%
       increments, and may only be imposed at the same rate as a service
       occupation tax imposed by the county. A number of different types of
       products are exempted from home rule county taxation. Sellers are
       permitted to recover the cost of such taxes by stating the tax in a
       separate charge, along with other sales taxes. The Department of
       Revenue is charged with collection and enforcement. Apart from the
       words “at retail in the county,” the statute contains little guidance on
       how a sale is properly located for tax purposes. The only prescription
       for situs of sale in the statute governs sales of coal and other minerals:
       “For the purpose of determining the local governmental unit whose
       tax is applicable, a retail sale by a producer of coal or other mineral
       mined in Illinois is a sale at retail at the place where the coal or other
       mineral mined in Illinois is extracted from the earth.” Id. The Home
       Rule Municipal Retailers’ Occupation Tax Act is identical in these
       provisions. 65 ILCS 5/8-11-1 (West 2012). Neither Act contains an
       explicit statement of legislative purpose.
¶ 28        The “Taxes” section of the Regional Transportation Authority Act
       allows the Board of Directors to impose a retail occupation tax upon
       “all persons engaged in the business of selling tangible personal
       property at retail in the metropolitan region.” 70 ILCS 3615/4.03(e)
       (West 2012). The “Taxes” section prescribes applicable tax rates for
       certain products in Cook County and prescribes a separate tax rate for
       Du Page, Kane, Lake, McHenry, and Will Counties. Similarly to the
       home rule county and municipal ROT Acts, the “Taxes” section of
       the RTA Act requires the Board to enact a parallel service occupation
       tax and title tax if it enacts a retail occupation tax. Sellers under the
       RTA Act are likewise permitted to recover the cost of such taxes
       from buyers by stating the tax separately. The RTA Act similarly

                                          -7-
       lacks any definition for situs of sale aside from sales of coal and other
       minerals. That provision is virtually identical to the one contained in
       the home rule county and municipal ROT Acts. The RTA Act does
       contain statements of legislative purpose, describing public
       transportation as an “essential public purpose.” 70 ILCS
       3615/1.02(a)(i) (West 2012).
                “There is an urgent need to reform and continue a unit of local
                government to assure the proper management of public
                transportation and to receive and distribute State or federal
                operating assistance and to raise and distribute revenues for
                local operating assistance. System generated revenues are not
                adequate for such service and a public need exists to provide
                for, aid and assist public transportation in the northeastern
                area of the State, consisting of Cook, DuPage, Kane, Lake,
                McHenry and Will Counties.” Id.
¶ 29        Thus, the plain meaning of these statutes is to allow home rule
       counties, home rule municipalities, and the Regional Transportation
       Authority to impose retail occupation taxes on persons engaged in the
       business of selling. In the context of the Regional Transportation
       Authority Act, such taxes are to be collected in part because the
       revenues generated by public transportation are insufficient to support
       that “essential public purpose” in Cook, Du Page, Kane, Lake,
       McHenry, and Will Counties. However, the plain language of the
       statutes is sparse in definition for where the “business of selling”
       takes place. This court’s prior interpretations of the “business of
       selling” in a closely related tax are instructive.
¶ 30        We have interpreted the plain meaning of a tax on the business of
       selling under the Retailers’ Occupation Tax Act (35 ILCS 120/1 et
       seq. (West 2012)), to be a tax on the occupation of retail selling, and
       not sales themselves. Standard Oil Co. v. Department of Finance, 383
Ill. 136, 142 (1943). Thus, the location of the business of selling
       inside or outside the state controls, and not the location of transfer of
       title. Id. The business of selling itself is
                “the composite of many activities extending from the
                preparation for, and the obtaining of, orders for goods to the
                final consummation of the sale by the passing of title and
                payment of the purchase price. It is obvious that such
                activities are as varied as the methods which men select to
                carry on retail business and it is therefore not possible to
                prescribe by definition which of the many activities must take
                place in Illinois to constitute it an occupation conducted in

                                         -8-
                this State. Except for a general classification that might be
                made of the many retail occupations, it is necessary to
                determine each case according to the facts which reveal the
                method by which the business is conducted.” Ex-Cell-O
                Corp., 383 Ill. at 321-22.
       Under this “composite of many activities” view, a sales agent, limited
       to soliciting orders and unable to bind the selling company in any
       way, did not constitute a person engaged in the business of selling
       within the state. Id. at 322-23.
¶ 31        The business of selling is distinct from the business of mere
       solicitation, as the Retailers’ Occupation Tax Act did not authorize
       a tax on mere solicitation. Allis-Chalmers Manufacturing Co. v.
       Wright, 383 Ill. 363, 366 (1943). In parsing the many activities
       making up the business of selling, some combinations of activities
       within the state are insufficient for the retail occupation tax to apply.
       Automatic Voting Machine Corp., 409 Ill. at 447 (describing
       imposition of the ROT as a question in which “each case, of
       necessity, rests completely and entirely on the foundation of its own
       facts”). For example, “promotional work, delivery of bids, transfer of
       title, delivery of machines and servicing” within the state have been
       held insufficient where bid preparation, contract execution,
       manufacturing, and accounting took place outside the state. Id. at
       451-52. In determining whether the business of selling has taken
       place in the state, courts may look through the form of a putatively
       interstate transaction to its substance, in determining whether enough
       of the business of selling took place within the state to subject it to
       the retail occupation tax. Marshall & Huschart Machinery Co. v.
       Department of Revenue, 18 Ill. 2d 496, 501 (1960).
¶ 32        In sum, there is a wealth of precedent that, under the Retailers’
       Occupation Tax Act, whether the taxable “business of selling” is
       being carried on requires a fact-intensive inquiry, to determine “each
       case according to the facts.” See Ex-Cell-O, 383 Ill. at 321-22. We
       next examine whether the legislature intended the “business of
       selling” under the Home Rule County Retailers’ Occupation Tax
       Law, the Home Rule Municipal Retailer’s Occupation Tax Law, and
       the Regional Transportation Authority Act to be judged under the
       same fact-sensitive approach.
¶ 33        The local ROT Acts do not, by their terms, contain any explicit
       link to or distinction from the Retailers’ Occupation Tax Act.
       Nonetheless, similar and related enactments provide guidance to the
       meaning of a potentially unclear term. In re Shelby R., 2013 IL

                                         -9-
       114994, ¶ 39. The Retailers’ Occupation Tax Act and the local ROT
       Acts at issue use near-identical language to describe the target of
       taxation: “persons engaged in the business of selling at retail tangible
       personal property” (35 ILCS 120/2 (West 2012) (Retailers’
       Occupation Tax Act)); and “all persons engaged in the business of
       selling tangible personal property *** at retail” (55 ILCS 5/5-1006
       (West 2012) (Home Rule County Retailers’ Occupation Tax Law)).
       We conclude the General Assembly did not create this parallelism
       casually or accidentally. The 1943 Ex-Cell-O decision predates the
       local ROT Acts and made clear this court’s interpretation of “the
       business of selling at retail.” The legislature’s decision to use this
       equivalent language—and retain it through many subsequent statutory
       amendments—signals its embrace of the Ex-Cell-O “composite of
       many activities” exposition. We conclude it applies to the business of
       selling in the local ROT Acts.
¶ 34       Having concluded the plain language of the “business of selling”
       requires a fact-intensive inquiry under the local ROT Acts, we find
       the plain language of the statute does not fully reveal legislative intent
       as to the situs of taxation. Accordingly, we turn to other tools of
       construction. This court has previously considered the legislative
       intent of the Retailers’ Occupation Tax Act (35 ILCS 120/1 et seq.
       (West 2012)), finding the General Assembly “sought to tax the
       business of selling at retail, to arrive at some method of relieving
       property from direct taxation and to place the burden upon that class
       of business which not only enjoyed the greater part of governmental
       protection but which benefited by being conducted under that
       protection.” Svithiod Singing Club, 381 Ill. at 199. We again stated
       the statutory intent to link retailer consumption of government
       services to retail occupation taxation under the Retailers’ Occupation
       Tax Act in Valier Coal Co. v. Department of Revenue, 11 Ill. 2d 402,
       406-07 (1957).
¶ 35       Moving from the state to local level, this court applied the same
       rationale to predecessors of the municipal and county retail
       occupation taxes in Gilligan v. Korzen, 56 Ill. 2d 387, 391-92 (1974)
       (stating the General Assembly enacted prior versions of the municipal
       and county ROT Acts to account for government services provided).
       Accordingly, we again find the legislative intent of the Home Rule
       County Retailers’ Occupation Tax Law, the Home Rule Municipal
       Retailer’s Occupation Tax Act, and the retail occupation tax
       provisions of the Regional Transportation Authority Act is to allow
       local governments to impose a tax on “persons engaged in the

                                         -10-
       business of selling tangible personal property” at retail within their
       jurisdictions, in order to relieve some tax burden that might otherwise
       be placed on property, in favor of placing it on retailers enjoying
       governmental services. 55 ILCS 5/5-1006 (West 2012); 65 ILCS 5/8-
       11-1 (West 2012); 70 ILCS 3615/4.03(e) (West 2012).
¶ 36       Taking these two conclusions about the plain meaning of the
       business of selling and legislative intent together, then, the local ROT
       Acts were enacted to allow local jurisdictions to tax the composite of
       selling activities taking place within their jurisdictions, collecting
       taxes in relation to services enjoyed by the retailer. Having concluded
       the “business of selling” under the local ROT Acts is a fact-intensive
       “composite of many activities” consonant with our holding in Ex-
       Cell-O, we now consider whether the Department’s regulations are
       consistent with the statute.

¶ 37                       Interpretation of the Regulations
¶ 38        Administrative regulations have the force and effect of law and
       are interpreted with the same canons as statutes. People ex rel.
       Madigan v. Illinois Commerce Comm’n, 231 Ill. 2d 370, 380 (2008).
       Additionally, administrative agencies enjoy wide latitude in adopting
       regulations reasonably necessary to perform the agency’s statutory
       duty. Julie Q. v. Department of Children & Family Services, 2013 IL
113783, ¶ 28. Such regulations carry a presumption of validity.
       People v. Molnar, 222 Ill. 2d 495, 508 (2006). However, regulations
       may not broaden or narrow a statute’s intended scope of taxation. Ex-
       Cell-O, 383 Ill. at 320. Regulations that are inconsistent with the
       statute under which they are adopted will be held invalid. Kean v.
       Wal-Mart Stores, Inc., 235 Ill. 2d 351, 366 (2009).
¶ 39        The regulations governing situs of taxation for the local ROT
       Acts each appear under the heading “Jurisdictional Questions” and
       are virtually identical. See 86 Ill. Adm. Code 220.115 (home rule
       counties); 86 Ill. Adm. Code 270.115 (home rule municipalities); 86
       Ill. Adm. Code 320.115 (RTA). For simplicity, we focus on the Home
       Rule County Retailers’ Occupation Tax Law regulations (86 Ill. Adm.
       Code 220.115).
¶ 40        The Department argues the local ROT Act regulation defining the
       situs of tax must be read in light of the statutory intent. Read in this
       light, it argues, the regulation sets up a totality-of-the-circumstances
       inquiry. Hartney argues that the regulation is instead written to
       address numerous possible fact scenarios in an uncertain
       field—speaking with certainty in scenarios where the outcome is

                                        -11-
       known and providing guidance as to a likely outcome in other
       scenarios. The interpretive dispute begins in 86 Ill. Adm. Code
       220.115(b):
                    “b) Mere Solicitation of Orders Not Doing Business
                        1) For a seller to incur Home Rule County Retailers’
                    Occupation Tax liability in a given county, the sale must
                    be made in the course of the seller’s engaging in the retail
                    business within that county. In other words, enough of the
                    selling activity must occur within the home rule county to
                    justify concluding that the seller is engaged in business
                    within the home rule county with respect to that sale.
                        2) For example, the Supreme Court has held the mere
                    solicitation and receipt of orders within a taxing
                    jurisdiction (the State), where the orders were subject to
                    acceptance outside the taxing jurisdiction and title passed
                    outside the jurisdiction, with the goods being shipped
                    from outside the jurisdiction to the purchaser in the
                    jurisdiction, did not constitute engaging in the business of
                    selling within the jurisdiction. This conclusion was
                    reached independently of any question of interstate
                    commerce and so would apply to a home rule county as
                    the taxing jurisdiction as much as to the State as the
                    taxing jurisdiction.” 86 Ill. Adm. Code 220.115(b).
¶ 41        The Department argues that subsection (b) incorporates our
       holdings on the meaning of the “business of selling” through its
       reference to “the seller’s engaging in the retail business within that
       county.” The Department further argues that subsection (b)(1)’s
       requirement that “enough of the selling activity must occur” within
       the taxing jurisdiction invokes this court’s view of sales under retail
       occupation taxes as the composite of many activities. The appellate
       court found, and Hartney argues, that subsections (b)(1) and (b)(2)
       instead set up a threshold inquiry, analyzing whether enough of the
       sales activity takes place in the taxing jurisdiction that it might be
       made subject to the retail occupation tax there. In Hartney’s view, this
       first inquiry would narrow the field from various jurisdictions having
       some contact with the sale to those with “enough” sales activity;
       subsequent sections either define or provide guidance as to which of

                                         -12-
       them will enjoy tax revenues from the retailer.3 Specifically, Hartney
       argues that subsection (c)(1) conclusively establishes its tax situs at
       the location of purchase order acceptance. Subsection (c)(1) states:
                   “c) Seller’s Acceptance of Order
                        1) Without attempting to anticipate every kind of fact
                   situation that may arise in this connection, it is the
                   Department's opinion, in general, that the seller’s
                   acceptance of the purchase order or other contracting
                   action in the making of the sales contract is the most
                   important single factor in the occupation of selling. If the
                   purchase order is accepted at the seller's place of business
                   within the county or by someone who is working out of
                   that place of business and who does not conduct the
                   business of selling elsewhere within the meaning of
                   subsections (g) and (h) of this Section, or if a purchase
                   order that is an acceptance of the seller’s complete and
                   unconditional offer to sell is received by the seller’s place
                   of business within the home rule county or by someone
                   working out of that place of business, the seller incurs
                   Home Rule County Retailers’ Occupation Tax liability in
                   that home rule county if the sale is at retail and the
                   purchaser receives the physical possession of the property
                   in Illinois. The Department will assume that the seller has
                   accepted the purchase order at the place of business at
                   which the seller receives the purchase order from the
                   purchaser in the absence of clear proof to the contrary.”
                   86 Ill. Adm. Code 220.115(c)(1).
       The Department argues that Hartney’s interpretation renders
       subsection (b)(1) meaningless, as there would be no reason for a
       threshold finding of which jurisdictions may be able to tax the seller
       if another subsection conclusively establishes which jurisdiction will
       tax the seller. For the reasons stated below, we agree with the
       appellate court’s and Hartney’s view.
¶ 42        The Department is correct in looking to Ex-Cell-O to interpret
       subsection (b), as it references the inquiry contemplated in that case.
       In Ex-Cell-O, we said:

          3
             No party has argued, and we do not consider, any claim that the
       Department might impose the same tax in more than one location for one
       sale.

                                         -13-
                     “An occupation, the business of which is to sell tangible
                 personal property at retail, is the composite of many activities
                 extending from the preparation for, and the obtaining of,
                 orders for goods to the final consummation of the sale by the
                 passing of title and payment of the purchase price. It is
                 obvious that such activities are as varied as the methods
                 which men select to carry on retail business and it is therefore
                 not possible to prescribe by definition which of the many
                 activities must take place in Illinois to constitute it an
                 occupation conducted in this State. Except for a general
                 classification that might be made of the many retail
                 occupations, it is necessary to determine each case according
                 to the facts which reveal the method by which the business is
                 conducted.” Ex-Cell-O, 383 Ill. at 321-22.
       We are persuaded that subsection (b)(1) makes reference to “the
       composite of many activities” in Ex-Cell-O, and subsection (b)(2)
       references that case and its progeny directly. But one key Ex-Cell-O
       concept is notably absent from the regulation: any explicit
       requirement to “determine each case according to the facts which
       reveal the method by which the business is conducted.” Id. at 322.
¶ 43        This absence is significant because we now confront a question
       not present in Ex-Cell-O. There, the question before the court was
       whether a retailer’s activity carried on within the state was sufficient
       to constitute the business of selling under the Retailers’ Occupation
       Tax Act. Id. At no point did the Ex-Cell-O court weigh which state
       had the majority of the business of selling incident to the sales.
       Unlike the case at bar, there were no competing claims between
       taxing jurisdictions for the enjoyment of tax funds. In short, the local
       ROT Acts present a question of allocation not present in Ex-Cell-O.
       It is true that, under subsection (b) as well as in Ex-Cell-O, enough of
       the selling activity must take place within the taxing jurisdiction to
       constitute the business of selling there. After that threshold inquiry,
       however, the Department must further determine which of the
       jurisdictions satisfying this test will be deemed the situs of taxation
       and will enjoy the tax revenues.
¶ 44        The Department argues that this threshold inquiry is meaningless
       if a subsequent section affirmatively defines tax situs.4 This is not so,

           4
           The Department also argues that the appellate court erroneously
       considered subsections (b)(1) and (b)(2) to make up a jurisdictional

                                         -14-
       for reasons we outline in discussing subsection (c). Subsection (b),
       standing alone, does not establish a fact-intensive test for the question
       of tax situs. For the regulation to mandate a fact-intensive test, such
       test must originate in a subsequent subsection or be clear from
       subsections read together.
¶ 45       Subsection (c), however, does much to undermine the
       Department’s view that the regulation embodies a totality-of-the-
       circumstances inquiry. It begins:
                   “c) Seller’s Acceptance of Order
                        1) Without attempting to anticipate every kind of fact
                   situation that may arise in this connection, it is the
                   Department’s opinion, in general, that the seller’s
                   acceptance of the purchase order or other contracting
                   action in the making of the sales contract is the most
                   important single factor in the occupation of selling. If the
                   purchase order is accepted at the seller’s place of business
                   within the county or by someone who is working out of
                   that place of business and who does not conduct the
                   business of selling elsewhere within the meaning of
                   subsections (g) and (h) of this Section, or if a purchase
                   order that is an acceptance of the seller’s complete and
                   unconditional offer to sell is received by the seller’s place
                   of business within the home rule county or by someone
                   working out of that place of business, the seller incurs
                   Home Rule County Retailers’ Occupation Tax liability in
                   that home rule county if the sale is at retail and the
                   purchaser receives the physical possession of the property
                   in Illinois. The Department will assume that the seller has
                   accepted the purchase order at the place of business at
                   which the seller receives the purchase order from the
                   purchaser in the absence of clear proof to the contrary.”
                   86 Ill. Adm. Code 220.115(c)(1).
       Subsection (c)(1) has three sentences, and the meaning of each of
       these sentences must be considered in light of the others. The first
       sentence states the Department’s opinion that the seller’s acceptance
       of purchase order is the “most important single factor in the

       provision. In fact, the appellate court said this inquiry was “analogous” to
       minimum contacts in personal jurisdiction. 2012 IL App (3d) 110144,
       ¶¶ 43-44.

                                          -15-
       occupation of selling.” For the purpose of discussion, we refer to this
       as the “opinion” sentence. The next sentence outlines four
       occurrences of purchase order acceptance and two conditions, under
       which the seller incurs tax liability. For the purpose of discussion, we
       refer to this as the “seller incurs” sentence. Subsection (c)(1)
       concludes with a presumption about the location of purchase order
       acceptance.
¶ 46        The “opinion” sentence, standing alone, could be viewed to
       contemplate a totality-of-the-circumstances test. “Without attempting
       to anticipate every kind of fact situation that may arise in this
       connection, it is the Department’s opinion, in general, that the seller’s
       acceptance of the purchase order or other contracting action in the
       making of the sales contract is the most important single factor in the
       occupation of selling.” Id. The phrase “[w]ithout attempting to
       anticipate every kind of fact situation that may arise” suggests a
       nuanced inquiry. “[I]t is the Department’s opinion, in general,”
       additionally suggests that other facts may control. These two phrases
       significantly temper the impact of “the seller’s acceptance of the
       purchase order or other contracting action in the making of the sales
       contract is the most important single factor in the occupation of
       selling.” That purchase order acceptance is the “most important single
       factor” (emphasis added) likewise implies that other factors might be
       considered. Once more, however, the regulation has used language
       that might suggest a totality-of-the-circumstances test, but stops short
       of establishing one.
¶ 47        On its own, the “opinion” sentence communicates less than it
       initially appears. First, it communicates that the Department does not
       try to anticipate every fact scenario that might arise in determining
       situs of retail occupation taxes, suggesting there may be difficulty in
       writing a rule that fits every situation. Next, the seller’s acceptance of
       the purchase order is, in general, the most important single factor to
       locating the business of selling. This sentence might help to establish
       a totality-of-the-circumstances test, depending on what follows.
¶ 48        But, as counsel for Hartney argues, what follows is not a list of
       factors that are considered important, or even guidance as to when the
       acceptance of purchase order might be overcome by other facts.
       Instead, subsection (c)(1) continues with the certain and definitive
       “seller incurs” sentence:
                “If the purchase order is accepted at the seller’s place of
                business within the county or by someone who is working out
                of that place of business and who does not conduct the

                                         -16-
                business of selling elsewhere within the meaning of
                subsections (g) and (h) of this Section, or if a purchase order
                that is an acceptance of the seller’s complete and
                unconditional offer to sell is received by the seller’s place of
                business within the home rule county or by someone working
                out of that place of business, the seller incurs Home Rule
                County Retailers’ Occupation Tax liability in that home rule
                county if the sale is at retail and the purchaser receives the
                physical possession of the property in Illinois.” (Emphasis
                added.) Id.
¶ 49        This sentence begins by stating four mutually exclusive scenarios
       for the receipt of a purchase order within the jurisdiction: (1)
       acceptance of a purchase order at the seller’s place of business in the
       county; or (2) acceptance of same by someone working out of that
       place of business who is not placed elsewhere by the rules for coal or
       selling from a truck; or (3) receipt at the seller’s in-county place of
       business of a purchase order that is itself acceptance of the seller’s
       complete, unconditional offer to sell; or (4) receipt of same by
       someone working out of that place of business. The “seller incurs”
       sentence concludes with two conditions: (1) sale is at retail, and
       (2) the purchaser receives physical possession within the state. When
       one of the purchase order scenarios occurs and the two conditions are
       met, “the seller incurs Home Rule County Retailers’ Occupation Tax
       liability in that home rule county.” Id. The “seller incurs” sentence
       contains none of the nuance or hedging present in the “opinion”
       sentence. It states that when one of these scenarios occurs, and two
       conditions are satisfied, “seller incurs *** liability in that home rule
       county.” Id.
¶ 50        Regulatory provisions, like statutory provisions, must be read in
       concert and harmonized. See People v. Rinehart, 2012 IL 111719,
       ¶ 26. The “opinion” sentence does not diminish the certainty of the
       “seller incurs” sentence. Rather, taking the two together renders a
       meaning that, although it is difficult to craft a rule that properly
       defines the situs of every sales arrangement, the place of purchase
       order acceptance is so important that it will conclusively govern when
       these conditions are met.
¶ 51        The final sentence, establishing a presumption as to where “the
       seller has accepted the purchase order,” does not provide support for
       the Department’s view that this regulation, in its entirety, creates a
       totality-of-the-circumstances approach. First, the final sentence does
       not establish a presumption on tax situs; it establishes a presumption

                                         -17-
       to determine where the purchase order was accepted. Second, because
       it creates a presumption as to the location of purchase order
       acceptance, it only bolsters the interpretation that subsection (c)(1) is
       establishing purchase order as the controlling test where the two
       conditions are met. Third, it makes clear that the “seller incurs”
       sentence is not simply a presumption under any totality-of-the-
       circumstances test contemplated by the “opinion” sentence. In
       drafting the regulation, the Department knew how to write a
       presumption, and this presumption as to the location of purchase
       order acceptance is the only one present in subsection (c)(1).
¶ 52       The following subsection, (c)(2), accords with the view that
       subsection (c)(1) conclusively establishes purchase order acceptance
       as the sole factor under certain circumstances, as it conclusively sets
       tax situs for certain situations when the purchase order is accepted
       outside the state. Subsection (c) thus contains not one but two
       definitive situs-setting provisions.
                      “(2) If a purchase order is accepted outside this State, but
                 the tangible personal property that is sold is in an inventory of
                 the retailer located within a county at the time of its sale (or
                 is subsequently produced in the county), then delivered in
                 Illinois to the purchaser, the place where the property is
                 located at the time of the sale (or subsequent production in the
                 county) will determine where the seller is engaged in business
                 for Home Rule County Retailers’ Occupation Tax purposes
                 with respect to that sale.” 86 Ill. Adm. Code 220.115(c)(2).
       Like the “seller incurs” sentence in subsection (c)(1), this sentence
       starts with a scenario: the purchase order being accepted outside the
       state. It continues by listing two conditions for imposition of the retail
       occupation tax: (1) that the personal property be in the inventory of
       the retailer within the county; and (2) that the personal property be
       delivered in Illinois to the purchaser. Where this scenario occurs
       under these two conditions, “where the property is located at the time
       of the sale *** will determine where the seller is engaged in business”
       for purposes of the retail occupation tax. Id.
¶ 53       This subsection also makes clear why subsection (b)(1) must
       frame a threshold inquiry as to whether enough sales activity is taking
       place within the jurisdiction to constitute the business of selling under
       the local ROT Acts. The Department argues that interpreting
       subsection (b)(1) as a threshold inquiry effectively strips that
       subsection of meaning, as there would be no reason to determine
       which jurisdictions may potentially subject the taxpayer to liability,

                                          -18-
       “when the place where the purchase order is accepted will
       conclusively determine where the taxpayer must pay.” Subsection
       (c)(2), by imposing liability even where a purchase order is accepted
       outside the state, makes clear that the purchase order does not
       “conclusively determine where the taxpayer must pay” under every
       provision of the regulation.5 The regulation contemplates that certain
       sales activities will take place outside the state, and others will take
       place within the state, but there might still be enough activity within
       the county to constitute the “business of selling” there. Subsection
       (c)(2) describes one arrangement that will bring about tax liability
       within the county by carrying on the business of selling there. If
       subsection (b)(1) instead framed an overall totality-of-the-
       circumstances test, subsection (c)(2) would not be written as an
       affirmative situs-setting rule, but rather as a simple example of one
       cross-border situation that would still qualify for retail occupation tax
       liability within the county. Instead, the regulation reads much as the
       appellate court interpreted it: subsection (b)(1) establishes a threshold
       inquiry into whether enough sales activity takes place in the local
       jurisdiction; subsections like (c)(1) and (c)(2) then settle the question
       of allocation among jurisdictions within the state.
¶ 54       Returning to our conclusion that subsections (c)(1) and (c)(2)
       contain two statements affirmatively setting a location for tax situs,
       reading the remainder of the regulation supports this view. Three
       additional provisions define “the seller’s place of business” or “where
       the seller is engaged in business” (86 Ill. Adm. Code 220.115(c)(1)-
       (2)) and one defines “the local governmental unit whose tax is
       applicable” (86 Ill. Adm. Code 220.115(h); 86 Ill. Adm. Code
       220.115(e) (long-term and blanket contracts); 86 Ill. Adm. Code
       220.115(f) (sales through vending machines); 86 Ill. Adm. Code
       220.115(g) (sales from a truck as portable place of business); 86 Ill.
       Adm. Code 220.115(h) (sales of coal and other minerals)). Each
       speaks definitively to the object of the inquiry: where is the business
       of selling being carried on, such that tax is imposed? None is stated
       as a presumption. None is stated as an example of a likely allocation
       under a totality-of-the-circumstances test. The regulation thus
       contains six provisions that affirmatively set the situs of taxation

           5
            Additionally, subsections (f), (g), and (h) govern situations in which
       a purchase order may not be involved at all. Subsection (c)(1)’s limited
       statement that the place of purchase order controls under these limited
       circumstances does not obviate the need for the (b)(1) threshold inquiry.

                                          -19-
       under different scenarios, so long as conditions are met. In sum, the
       overall structure of the regulation militates against the Department’s
       claim of an overall totality-of-the-circumstances test.
¶ 55       In interpreting the regulation, we turn finally to the Department’s
       argument that because subsection (d) lists other factors like the
       location of delivery and location where title passes, those “may play
       a role in determining where a retailer is located.” The Department
       argues that the presence of these factors supports its argument that the
       regulation crafts a totality-of-the-circumstances test, or there would
       be no occasion to consider these factors at all. We note, first, that
       these factors are described in the regulation as being “not necessary”
       and “not a decisive consideration.” 86 Ill. Adm. Code 220.115(d)(1)-
       (2). Indeed, none of the factors listed in subsection (d) are deemed
       important in the regulation; the subsection is titled “Some
       Considerations That Are Not Controlling.” Id. It is plausible this
       subsection means to rule out certain types of challenges to liability by
       taxpayers. It is plausible this subsection means to present factors to
       deciding situations that fit none of the fact scenarios definitively
       addressed in subsections (c)(1)-(2), (e), (f), (g), and (h), but which do
       meet the threshold requirements of subsection (b) so that tax liability
       may still be incurred. Having concluded that this subsection does not
       support the Department’s view, we need not and do not decide that
       question.
¶ 56       Even granting the Department considerable deference in
       interpreting its regulations, we cannot find that its reading of the
       regulation is correct. We conclude that the regulation, in subsection
       (c)(1), does define situs for retail occupation tax where purchase
       order acceptance occurs at the seller’s place of business within the
       county, with sale at retail and the purchaser taking delivery within the
       state. We now turn to whether the regulation constitutes a valid
       implementation of the statutes.

¶ 57               Reconciling the Regulation with the Statute
¶ 58       As noted previously, the legislative intent of the local ROT Acts
       is to permit home rule municipalities and counties, along with the
       RTA, to enact retail occupation taxes in order to place some of the
       burden of paying for local government services on the retailers who
       enjoy them. See Svithiod Singing Club, 381 Ill. at 199. The retail
       occupation tax is laid upon the business of selling and not upon sales
       themselves. Standard Oil Co., 383 Ill. at 142. Under our precedent,
       the business of selling is a composite of many activities. Ex-Cell-O

                                         -20-
       Corp., 383 Ill. at 321-22. Determining that enough of the business of
       selling is taking place in a given jurisdiction requires a fact-intensive
       inquiry. Id.
¶ 59        Administrative agencies have deference in enacting regulations,
       and regulations are presumed valid. Julie Q. v. Department of
       Children & Family Services, 2013 IL 113783, ¶ 28; People v. Molnar,
       222 Ill. 2d 495, 508 (2006). Administrative agencies likewise are
       entitled to deference in interpreting the statutes they enforce. Provena
       Covenant Medical Center v. Department of Revenue, 236 Ill. 2d 368,
       387 n.9 (2010). Agencies’ broad latitude in enacting regulations to
       enforce their statutes may include presumptions or other shortcuts in
       administrative decision making. We do not strike regulations down
       simply because they are unwise or bad policy. Oak Liquors, Inc. v.
       Zagel, 90 Ill. App. 3d 379 (1980). Thus, our review is not whether the
       regulation is the best possible implementation, but rather whether it
       is a permissible interpretation of the statute.
¶ 60        As noted above, the question of determining tax situs for a tax on
       the business of selling presents a complicated inquiry. One line of
       reasoning would persuade us to find the regulation constitutes a
       reasonable compromise between the administrative difficulty of
       determining appropriate tax situs in every situation and the need for
       accurate tax assessment. A regulation might call for a “shortcut” in
       decisionmaking without effecting a prohibited expansion or
       contraction of the taxing statute it implements.
¶ 61        On the other hand, a regulation cannot narrow or broaden the
       scope of intended taxation under a taxing statute. Kean v. Wal-Mart
       Stores, Inc., 235 Ill. 2d 351, 372 (2009). A regulation that does so
       must be held invalid. Id. We are persuaded that this regulation
       impermissibly narrows the local ROT Acts, contrary to the
       legislature’s intention to allow local governments to collect taxes
       from retailers in their jurisdictions. First, it does not amply prescribe
       the fact-intensive inquiry contemplated by this court in Ex-Cell-O.
       Second, by allowing for only one, potentially minor step in the
       business of selling to conclusively govern tax situs, this regulation
       impermissibly constricts the scope of intended taxation.
¶ 62        In the case at hand, Hartney conducted the bulk of its selling
       activity in Forest View. It carried out all of its marketing efforts,
       maintained inventory, set prices, and cultivated sales relationships
       there. Hartney began routing its purchase orders through a separate
       sales office exclusively for the purpose of tax planning. While the
       clerk in Mark could bind Hartney, the clerk participated in no other

                                         -21-
       aspect of the business of selling. This shift from Forest View to Mark
       removed Hartney from the retail occupation tax rolls of Forest View,
       Cook County, and the RTA. This effected more than a shift in tax
       allocation; it effected a full removal from tax liability. It did not,
       however, remove Hartney from the enjoyment of services offered by
       the Local Governments.
¶ 63       Amici Taxpayer’s Federation of Illinois and Illinois Retail
       Merchants Association argue that certainty is a high priority for
       retailers, pointing to numerous states employing bright-line tests in
       determining tax situs. These are arguments well suited for the General
       Assembly. Should the legislature decide that tax certainty warrants a
       single-factor determination of retail occupation tax situs, it can draft
       such a test. However, by consistently employing the “business of
       selling” language that we have interpreted to require a fact-intensive
       inquiry to find the proper situs of a composite of many activities, the
       legislature has effectively invoked this court’s precedent on the
       Retailers’ Occupation Tax Law. It is not incumbent upon this court
       to decide the best tax policy; the court is to decide the tax policy the
       legislature has chosen and communicated through the statute.
¶ 64       The “Jurisdictional Questions” regulations embodied in 86 Ill.
       Adm. Code 220.115, 270.115, and 320.115 are too inconsistent with
       the statutes and case law to stand, and they are held invalid.

¶ 65                                   Abatement
¶ 66       Regulations carry the force and effect of law. People ex rel.
       Madigan v. Illinois Commerce Comm’n, 231 Ill. 2d 370, 380 (2008).
       However, an agency’s powers are limited to those granted by statute,
       and acts of an agency beyond its statutory powers are void. Julie Q.
       v. Department of Children & Family Services, 2013 IL 113783, ¶ 24.
       Likewise, “where the public revenues are involved, public policy
       ordinarily forbids the application of estoppel to the State.” Austin
       Liquor Mart, Inc. v. Department of Revenue, 51 Ill. 2d 1, 4 (1972).
       Were these the only governing principles, the Department might still
       collect the tax despite its invalid regulation. In the absence of the void
       regulation, Hartney would be taxed under the general principles of the
       statute, left only with its argument for estoppel by erroneous
       information letters and other publications of the Department.
¶ 67       Yet the legislature has provided for a taxing agency to become
       bound to its own flawed interpretation of the law in effect at that
       time. See, e.g., McLean v. Department of Revenue, 184 Ill. 2d 341,
       363 (1998) (holding that an erroneous interpretive release precluded

                                         -22-
       the Department from levying tax during that time period). The
       Taxpayers’ Bill of Rights Act imposes upon the Department a duty to
       “abate taxes and penalties assessed based upon erroneous written
       information or advice given by the Department.” 20 ILCS 2520/4(c)
       (West 2008). The Department’s own written regulations provide
       guidance to taxpayers as to their liability. While we do not find
       Hartney’s approach to retail occupation tax liability consistent with
       the statute or this court’s precedent, the company did act consistently
       with the Department’s regulation published at the time.6 It has been
       six years since the most recent of these sales were completed.
       Hartney’s ability to recover such amounts from its customers, or to
       plan for such tax liabilities in advance, has long since passed.
¶ 68       We do not disturb the findings by the trial and appellate courts
       that, under the regulations, Hartney accepted its purchase orders and
       long-term contracts in Mark. Because of the Department’s erroneous
       regulations, the Department has a duty under the Taxpayers’ Bill of
       Rights Act to abate Hartney’s penalties and retail occupation tax
       liability of Forest View, Cook County, and the Regional
       Transportation Authority for the audit period.
¶ 69       For the reasons stated, the judgment of the appellate court is
       affirmed in part and reversed in part.

¶ 70       Appellate court judgment affirmed in part and reversed in part.

           6
            The Local Governments have additionally argued that Hartney’s
       arrangement should be disregarded as a sham transaction. Analyzing a
       sham transaction requires assessment of the multiple steps of a transaction,
       with each being considered relevant, to determine whether economic reality
       accords with the formal arrangement. Commissioner v. Court Holding Co.,
       324 U.S. 331, 334 (1945). Because we conclude the regulation erroneously
       sited tax based solely on purchase order acceptance in the case at bar, the
       sham transaction doctrine is unavailing. Hartney structured its affairs in
       accordance with the regulation, by relocating its order-receiving function
       to a lower tax jurisdiction. Hartney’s arrangement was not without
       economic substance or economic effect. “The legal right of a taxpayer to
       decrease the amount of what otherwise would be his taxes, or altogether
       avoid them, by means which the law permits, cannot be doubted.” Gregory
       v. Helvering, 293 U.S. 465, 469 (1935).

                                          -23-