RTA sues Kankakee and Channahon

August 23, 2011

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The Regional Transportation Authority and the city of Chicago are suing the cities of Kankakee and Channahon for more than $100 million in alleged lost revenue.

RTA Chairman John Gates says there are a number of companies doing business in the 6-county RTA region that aren't paying the sales tax in the area. He says, instead, those companies are diverting paperwork through towns like Kankakee and Channahon because they have lower sales taxes.

"They are using that both to reduce their prices and those localities where they are diverting the paperwork through are giving them what is in effect kickbacks on the sales taxes that are collected in those small towns," he said.

Gates also says the two municipalities disregarded a Freedom of Information Act request for names of the companies and agreements.

A statement from the Village of Channahon says it's acting lawfully within the state's tax code. It also says it's surprised that Chicago would file suit against a town with a budget that's less than half of one percent of Chicago's annual budget. 

Kankakee officials also say the city is lawfully following the state's tax code, and denies RTA's claim that certain businesses relocated to Kankakee to get a tax break.