Arlington Heights, Rolling Meadows clash before state Supreme Court over sales tax from Cooper’s Hawk
Appearing before the Illinois Supreme Court Wednesday, attorneys for Rolling Meadows and Arlington Heights argued whether the former should pay the latter more than $1 million in misallocated sales taxes from Cooper’s Hawk Winery & Restaurant.
The upscale restaurant at 798 W. Algonquin Road straddles the towns’ borders. Technically, it’s in Arlington Heights, but the Illinois Department of Revenue mistakenly coded it as a Rolling Meadows business when it opened in June 2011.
Arlington Heights officials discovered the error at the onset of the pandemic and were able to get back $109,000 covering the last six months of 2019 — the maximum allowable under state law — and sued Rolling Meadows in 2022 for the rest.
Andrianna Kastanek, an attorney retained by Rolling Meadows’ city council, maintained Wednesday that Arlington Heights is limited to the six-month “look back” administered by the state revenue department, which she said has exclusive jurisdiction over misallocated tax disputes.
“It reflects the realities of municipal planning that a municipal budget functions on a year-to-year basis,” Kastanek said during oral arguments before the seven-member court in Springfield. “Funds are committed for the services of the residents of the municipality based on the income that comes in, and the six-month cap reflects the realities of how municipalities commit and allocate their funds.”
“Arlington Heights has received that remedy,” she said. “It’s entitled to nothing more.”
Hart Passman, Arlington Heights’ village attorney, countered that the village was right to sue Rolling Meadows for unjust enrichment and conversion in Cook County court to get back nearly $1.2 million, and that the courts are the proper place to resolve the dispute beyond the revenue department’s six-month remedy.
“Cooper's Hawk is in Arlington Heights. The money should go to Arlington Heights,” Passman said. “Now, the only question left is: Why does Rolling Meadows get to keep this money that they themselves know was never theirs to begin with?”
Kastanek likened the six-month reimbursement period to a statute of limitations. She said the Illinois General Assembly established the remedy when it conferred authority on the revenue department to resolve disputes and correct misallocations.
And if legislators think only getting six months of back taxes is unfair, Kastanek noted a bill to amend the rule died when a new legislative session began a week ago.
“That’s important because it demonstrates not only that the fix is with the legislature and not with the courts, but also that the General Assembly doesn’t see a problem with the language of this statute,” she said.
Passman said the six-month offset through the state agency is not “exclusive,” and that a “cumulative” remedy can be achieved through litigation.
“There’s no problem with the statute. There’s a problem with how Rolling Meadows interprets it,” he said. “This is not a statute of limitations.”
A Cook County circuit court judge initially dismissed Arlington Heights’ suit seeking more than eight years’ worth of back taxes, before an appellate court reversed the lower court ruling in a 2-1 decision a year ago.
State Supreme Court Chief Justice Mary Jane Theis said the case will be taken under advisement. A written decision is expected.