United Airlines and American Airlines "operate sham offices" in Sycamore, Illinois, which allows them to avoid paying millions of dollars in taxes, the Regional Transportation Authority (RTA) alleges.
The agency -- which oversees three transit agencies: CTA, Metra and Pace -- filed suit Monday in Circuit Court of Cook County against Chicago-based United. But, the agency held off on a lawsuit against American because the airline is currently in the midst of bankruptcy proceedings.
According to the RTA, the airlines accept fuel in Sycamore, rather than Chicago. By "accepting" fuel in Sycamore, the airlines pay 8 percent in sales tax, rather than the 9.5 percent they would pay in Chicago, a move that has cost taxpayers in Chicago and Cook County $300 million over the last seven years, the RTA contends.
“Governments across the country have been forced to do more with less. CTA, Metra and Pace have had to work with constrained budgets and have needed to raise fares and reduce service because the money’s just not there. Now we know why,” RTA Executive Director Joe Costello said in a statement. “These airlines happily accept taxpayer-supported services – like the mass transit that many of their customers and employees use – but don’t pay what is due to support those services. That is just wrong.”
The RTA alleges the airlines "entered into 25-year agreements with Sycamore, guaranteeing the city as much as a half-million dollars every year that the airlines are allowed to claim that they 'accept' jet fuel there." In return, Sycamore "kicks back a large part of its share of the sales tax to the airlines, amounting to as much as $14 million a year."
The two airlines operated offices in Sycamore, and representatives from both airlines say their operations are legal, according to published reports.
"These small, part-time offices are rarely occupied and, in at least one case, don’t appear to even have a computer. But both multi-billion dollar companies claim they purchase their jet fuel – one of their largest expenses – from those offices," the RTA said in a release announcing the lawsuit.
The RTA in 2011 filed similar lawsuits against the towns of Kankakee and Channahon.