Enterprise fuming over suburban rental tax

Enterprise Rent-A-Car says the city of Chicago is overstepping its bounds with a tax on suburban drivers who use their rentals primarily in the city.

The Nevada-based company is suing the city in Kane County Circuit Court, challenging the tax's legality.

"What right does the city have to regulate and tax a transaction that takes place in Kane County?" Stanley R. Kaminski, an attorney for Enterprise, said Tuesday. "I don't know they have any."

Formally instituted by the Chicago Department of Revenue last June, the 8-percent tax is specific to renters in Cook, DuPage, Kane, Lake, McHenry and Will counties who drive the vehicle in Chicago more than half the time.

To avoid the tax, renters must provide copies of their driver's licenses to the rental agency and swear in a legally binding affidavit that they will not spend the bulk of the agreement driving in the city. People who do not provide this information, or who reside in the city, are presumed to drive the majority of the time on Chicago roads.

Enterprise alone had 32,000 vehicle rentals at nine Kane County locations last year, and less than 1 percent of those customers provided Chicago addresses, according to the lawsuit. The company leases about 650,000 vehicles a year in the remaining suburban counties.

Kaminski said it's flawed to presume anyone with a Chicago address would drive a rental car mostly in Chicago; some customers rent vehicles for personal use or business in the suburbs.

Enterprise has not previously required customers to provide copies of their licenses due to liability and security concerns, he added.

"I don't know of any projections, but the cost of the actual manpower of collecting, inputting and retaining the (license) data has to be hundreds of thousands of dollars," Kaminski said.

A spokesman for the Chicago Department of Revenue responded Tuesday with a statement saying the tax is neither unreasonable nor an invasion of renters' privacy.

According to the statement, the city has been collecting the tax since 1997. But Kaminski said that while it was informally introduced then, Chicago did not begin taxing suburban Enterprise rentals until June.

The case has been assigned to Kane County Judge Michael J. Colwell.