The Illinois Supreme Court has ruled in favor of Rolling Meadows in a tax dispute with Arlington Heights concerning the misallocation of sales tax revenue from Cooper's Hawk Winery & Restaurant. As reported by the Chicago Sun-Times, the case stemmed from an error by the Illinois Department of Revenue, which incorrectly coded the restaurant with a Rolling Meadows address, causing the municipality to receive over $1 million in sales tax revenue that was due to Arlington Heights.
The Supreme Court's decision upholds a trial court's dismissal of the case, undercutting an appellate court's earlier decision that had favored Arlington Heights. In the unanimous opinion, it was stated, "the IDOR has exclusive jurisdiction over tax matters, including misallocation disputes." According to an interview with Arlington Heights Mayor Thomas Hayes in the Daily Herald, Hayes described the outcome as "a case of unjust enrichment and right versus wrong," and took issue with Rolling Meadows for a "persistent refusal to act fairly and responsibly."
Rolling Meadows Mayor Lara Sanoica responded to the Supreme Court ruling, saying she was "pleased" and that the decision provides clarity on how such disputes should be handled. The restaurant in question, located at 798 W. Algonquin Road in Arlington Heights, was registered with IDOR in 2011 but was incorrectly listed under Rolling Meadows for nearly a decade until Arlington Heights spotted the mistake in March 2020. Following the court's decision, Sanoica said, "The City of Rolling Meadows will continue to cultivate a positive working relationship with the Village of Arlington Heights to promote the overall well-being and prosperity of our shared community."
The Illinois Department of Revenue has since reimbursed Arlington Heights for six months of tax revenue, totaling $109,000, which is the statutory limit under Illinois law. The Supreme Court acknowledged the appearance of unfairness, as Justice Mary K. O'Brien noted in the ruling quoted by the Chicago Sun-Times, "it may appear unfair that Arlington Heights was deprived of a decade of tax revenues." However, both municipalities were deemed to share responsibility for not reviewing the IDOR reports that could have earlier corrected the misallocation issue.
Despite Arlington Heights' expressed disappointment in the ruling and Rolling Meadows for retaining the tax revenue, the higher court's decision closes this particular legal chapter, setting a precedent for how such disputes are to be judged in the state. The ruling not only bears financial implications but also reflects the boundaries of municipal oversight and the consequences of administrative oversight in tax matters.
