Court Opinion

ID: 9710574
Source: CourtListenerOpinion
Date Created: 2023-08-26 04:12:08.358253+00
Date Added: 2024-06-11T18:22:57.926173
License: Public Domain

JUSTICE HEIPLE, dissenting: The majority’s conclusion that section 130.1915 is a valid administrative regulation is erroneous. They fail to comprehend the nature of plaintiffs challenge to section 130.1915 let alone provide a coherent justification for the validity of that section. Section 130.1915 is invalid because it exceeds the scope of the Department of Revenue’s authority to enact regulations to implement or enforce the Retailers’ Occupation Tax Act (the Act). Section 130.1915 taxes the auctioneer’s failure to disclose information to the purchaser or record the principals’ names and addresses in his records, not the auctioneer’s status as a seller of personal property at retail. Moreover, section 130.1915 is unreasonable because it serves none of the purposes identified by the majority while at the same time producing grossly unfair results for the auctioneer. Therefore, I respectfully dissent. The General Assembly has “the exclusive power to raise revenue.” Ill. Const. 1970, art. IX, § 1. The General Assembly has authorized the Department of Revenue “to make, promulgate and enforce *** reasonable rules and regulations relating to the administration and enforcement” of the Act (35 ILCS 120/12 (West 1996)), but the Department has no authority to enact administrative regulations which alter or extend the Act’s substantive provisions. Canteen Corp. v. Department of Revenue, 123 Ill. 2d 95, 108 (1988). A tax cannot be imposed by administrative decision. Brennan Cattle Co. v. Jones, 41 Ill. 2d 260, 265 (1968). The power to tax is reserved exclusively for the General Assembly. Section 130.1915, therefore, is valid only if it is reasonably related to the Act’s underlying purpose, namely to tax “those engaged in the business of selling at retail tangible personal property.” 35 ILCS 120/12 (West 1996). The majority concludes that the provision in section 130.1915 requiring the auctioneer to disclose the name and address of the principal to the purchaser at or before the time of sale is valid because it allows purchasers to ascertain their use tax liability. Purchasers, however, have no interest in ascertaining their use tax liability. The use tax is imposed “upon the privilege of using in this State tangible personal property purchased at retail from a retailer.” 35 ILCS 105/3 (West 1996). The purpose of the use tax is “ ‘to prevent avoidance of the [retailers’ occupation] tax by people making out-of-State purchases, and to protect Illinois merchants against such diversion of business to retailers outside Illinois.’ ” Brown’s Furniture v. Wagner, 171 Ill. 2d 410, 418 (1996), quoting Klein Town Builders, Inc. v. Department of Revenue, 36 Ill. 2d 301, 303 (1966). “The ultimate incidence of the use tax falls upon the consumer,” the Brown’s Furniture court noted, but “because of the impracticality of collecting the tax from individual purchasers, the burden of its collection is imposed upon the [retailer].” Brown’s Furniture, 171 Ill. 2d at 418. The retailer’s failure to collect the tax when due may not discharge the purchaser’s use tax liability (Klein Town Builders, 36 Ill. 2d at 303-04), but the fact remains that the responsibility for collecting the tax falls on the retailer, not the purchaser. In other words, the purchaser has absolutely no conceivable interest in ascertaining her use tax liability because the retailer, not the purchaser, collects the use tax. Whether an auctioneer discloses the name and address of the principal to the purchaser does not change the nature of the auctioneer’s occupation; the auctioneer is either engaged in the business of selling at retail or not. Section 130.1915 taxes the auctioneer’s failure to disclose, not the privilege to engage in the business of selling at retail. As such, section 130.1915 does not reasonably implement the Act. Instead, section 130.1915 exceeds the scope of the Department’s authority because it usurps the General Assembly’s exclusive power to tax. The majority asserts, without any elaboration or analysis, that section 130.1915 reasonably implements the Act because requiring an auctioneer to record the names and addresses of principals “facilitates audits.” The majority’s apparent willingness to allow the Department of Revenue to enact any regulation which “facilitates audits” is overreaching. Equally wrong is the majority’s assertion that section 130.1915 actually facilitates audits. If an auctioneer is exempt from taxation under the Act, the Department undoubtedly has a legitimate need to determine whether or not the auctioneer’s principals are “engaged in the business of selling at retail tangible personal property.” If they are, the Department can tax the principals. The requirement in section 130.1915 that auctioneers record the name and addresses of principals, however, provides virtually no assistance to an audit by the Department. Section 130.1915 does not require the auctioneer to match principals to any particular item of inventory. Section 130.1915 merely requires that the name and address of the principal “appear[ ] upon the books and records of the auctioneer” without specifying any particular items owned by the principal. The recording requirement in section 130.1915, like the disclosure requirement, exceeds the scope of the Department’s authority. It taxes the failure to record, not the occupation of selling tangible personal property at retail. Section 130.1915 imposes a tax under the Act even if the auctioneer can identify the principal or principals for whom he sells goods. In this case, for example, plaintiff testified at the administrative hearing his records were destroyed in the Metro East Floods of 1993. Although plaintiff could not produce his records documenting the names and addresses of his principals, he testified he personally knew the identities of all the principals for whom he sold goods. Such an irrebuttable presumption that an auctioneer may be taxed under the Act is grossly unfair, unreasonable and contrary to law. For these reasons, I would affirm the portion of the circuit court order invalidating section 130.1915 and remand to the circuit court only for a recalculation of the Department’s assessment for taxes on plaintiffs sale of goods that he owned.