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Suit: United Operates ‘Sham’ Office To Avoid Taxes

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CHICAGO (CBS) – The Regional Transportation Authority is taking United Airlines to court.

The RTA says the Chicago-based carrier claims it buys large quantities of fuel through a small office in Sycamore.

As a result, United avoids paying millions in taxes to the city of Chicago–lost revenue that could be added to CTA’s budget.

United says the Sycamore operation is legal.

“We are still reviewing the complaint, but we believe that any such suit is without merit,” said United spokesman Megan McCarthy. “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. We will vigorously defend ourselves against these claims.”

Fares on the CTA are rising for many riders, starting today.

The RTA alleges United Aviation Fuels Corp., a subsidy of United Airlines, has operated a “sham” office in the DeKalb County community of Sycamore since 2001 after reaching an agreement to pay the town more than $300,000 a year – a fraction of what it would have owed in sales taxes in Chicago and Cook County.

“The only reason that United Fuels has an office in Sycamore is to attempt to create a sham tax [location] for fuel sales in a lower taxing jurisdiction,” reads a draft of the lawsuit obtained by The Associated Press.

The RTA, which contends the office has no computer and is staffed by one person who only works part-time, said consultants visited the site on a recent weekday and found it locked with nobody inside. The agency said judging from the few chairs and empty desks seen through a window, there is little, if any, business occurring in the office.

The RTA said in a prepared statement that “sales tax dodges” have cost the city of Chicago $133 million in lost sales tax revenue since 2005.

They have cost Cook County an additional $60 million and Metra, Pace and the Chicago Transit Authority another $96 million, according to the RTA, which oversees the three agencies and relies on sales tax revenue for much of its funding.

(TM and © Copyright 2013 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten or redistributed.)

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