Judicial Rulings

Sales tax on Illinois coal outside state

Nearly $7 million in sales tax is a lot to lose for the state, but exemption from it could be a powerful stimulus for out-of-state use of Illinois coal, with accompanying strengthening of the state's economy. The Illinois Supreme Court's decision May 30, on strictly legal interpretation, opted for the economy.

Union Power Co. of Missouri and Georgia Power Company both purchased Illinois coal for use outside the state and paid the sales tax (more properly the use tax) under protest. In both cases the coal was shipped by a combination of rail and barge, under complex shipping and payment arrangements. The court concluded, however, that "the purchasers did not, either personally or through their representatives, receive physical possession of the coal within Illinois." That was enough to trigger the exemption granted in the Use Tax Act (see Ill. Rev. Stat. 1983, ch. 120, sec. 439.3) and the regulations of the Department of Revenue on application of the tax (see 86 Ill. Admin. Code sees. 130.605(a), (a)(l), (a)(2), (c), (d) (1985)).

The Department of Revenue argued that the dock and barge companies that handled the coal were representatives of the power companies. It said that its undefined use of the term '' representative" is broader than that of the Uniform Commercial Code (see Ill. Rev. Stat. 1987, ch. 26, sec. 1-201(35)). Even using a broad dictionary definition, the court found that the cited companies lacked "authority to do anything with the coal other than facilitate its transportation."

The Department of Revenue cited its Private Letter Ruling no. 81-0264, March 5, 1981, to bolster its case. The court said that under statute the letter has the force of a rule since it touches matters of general applicability. Under the court's interpretation the case almost becomes a blueprint for structuring shipments of coal that would be tax-exempt.

Justice William G. Clark wrote the opinion in Union Electric Co. v Department of Revenue and Georgia Power Co. v Arch of Illinois (136 Ill. 2d 385).

On August 22 the Illinois Supreme Court refused to reconsider its July 9 decision In re Estate of Greenspan (Docket No. 67903), which had established conditions under which hydration and nutrition tubes could be removed from a comatose patient. The court had remanded the case to Cook County probate court for decision and appointed attorneys to argue against the removal in the action there. These attorneys had requested the rehearing and could, conceivably, request hearing by the U.S. Supreme Court.

On August 22 the court also refused to reconsider its July 9 decision on judicial subdistricts in Cook County (Chicago Bar Association v Illiniois State Board of Elections, 136 Ill. 2d 513). The court had declared appellate subdistricts unconstitutional and circuit subdistricts inseparable from the statutory plan.

The plan had included creation of 10 new countywide judgeships. An assistant state's attorney in Cook County who had won the Democratic primary for one of the new circuit judgeships sought reconsideration by the Supreme Court on the grounds that the decision violated her right to seek election and disenfranchised the 640,000 voters in the election. The court gave no reason for its denial.

The court also denied Atty. Gen. Neil F. Hartigan's request for reconsideration of the sections on the circuit court subdistricts separate from those on the First Appellate District.

Action in the federal courts might be one option for supporters of the plan. Lawmakers have also said that they will reintroduce Cook County judicial subdistricting. in two separate bills, in the fall veto session.

The Illinois Supreme Court has amended Rule 7.4 of the Illinois Rules of Professional Conduct to permit lawyers to advertise specialties, but only with certain restrictions. Previously lawyers could describe themselves only as specialists in patent, trademark or admiralty matters. Now other specialties can be shown, but only if supported by verifiable evidence of certification by some organization and with the statement that '"the Supreme Court of Illinois does not recognize certifications or specialties in the practice of law."

The change brings Illinois rules into compliance with the U.S. Supreme Court's decision in Peel v Attorney Registration and Discipline Commission of Illinois (Docket No. 88-1775). Bar associations in the state seem dissatisfied with the change and have appointed study committees. It is expected that they will ultimately recommend a system of certification in Illinois.         F. Mark Siebert

October 1990/Illinois Issues/29