From Illinois Public Radio - News Local/State -

RTA Alleges United, American Airlines Using ‘Sham’ Office

By Jenna Dooley and Lauren Chooljian

The Regional Transportation Authority alleges two major airlines are running "sham" business operations to get out of paying higher taxes on jet fuel.

According to RTA, United Airlines and American Airlines are claiming they purchase their jet fuel from offices in Sycamore, Ill. RTA believes they are actually doing business out of their Chicago headquarters.

RTA contends the practice has deprived Chicago and Cook County taxpayers of nearly $300 million over the last seven years.

The RTA filed a suit against United, while deferring formal action against American Airlines, since the company is currently involved in bankruptcy proceedings.

RTA Chief of Staff Jordan Matyas said the Sycamore office is sparse with empty tables and no computers. Still, his organization estimates a million gallons of jet fuel are purchased each day.

“We need to stop this," Matyas said. "The RTA has a fiduciary duty to bring in as much money for the mass transit in Chicago, and we can’t allow any company to dodge the proper sales tax. So I would say to the city of Sycamore...it is time that it stopped.”

The RTA filed the suit against Chicago-based United, while deferring formal action against American Airlines, since the company is currently involved in bankruptcy proceedings.

This isn't the first time the RTA has sued over sales tax avoidance. In 2011, RTA filed similar lawsuits against far south suburban Kankakee and Channahon, which the company alleges has similar deals with retailers and other airlines.

RTA has differed formal action against American Airlines, as the company is currently involved in bankruptcy proceedings. The airline wouldn't comment, only releasing this statement: "American does not comment on pending litigation but what it is doing in Illinois is permitted under Illinois law."

In a statement, United officials deny any wrongdoing.

"We are still reviewing the complaint, but we believe that any such suit is without merit. In fact, the operation of our fuel subsidiary in Sycamore has been examined by tax authorities in the past and has been determined to comply with all applicable laws," according to the statement released by United. "We will vigorously defend ourselves against these claims."

Meanwhile, the city of Sycamore said the city will defend its position. In a news release issued Monday afternoon, the city said the agreement with United Aviation has been reviewed by tax authorities in the past and determined to comply with state law.

Categories: Business, Law, Transportation