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AP reports lawsuit against UA to be filed 1/14 for "sham" fuel purchases office
Here is the report from AP, as reported on FoxNews.com, along with a link to the story. It will be interesting to see how this story plays out in the coming days/weeks and how it may affect UA's business (and possibly its customers).
[See also the report from the Chicago Tribune added on 1/15 which follows the AP report. The Tribune report has additional information.]
CHICAGO – "A transportation agency plans to file a lawsuit Monday alleging that United Airlines is falsely claiming to buy huge amounts of jet fuel out of a small, rural Illinois office that doesn't even have a computer to avoid paying tens of millions of dollars in taxes in Chicago, where the purchases are allegedly being made.".........
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United was involved in a lawsuit in the Bay Area years ago over something similar. In that case, they purchased all fuel for California airports in Oakland. Here are the highlights from one site, and it sounds very similar to the Chicago case:
Quote:
The revenue from the tax, while collected by the state, goes to the locality in which the sale was made. Which brought United and Oakland to the negotiating table in 2002. They made a deal that works like this:
A United subsidiary, based in Oakland, buys all United's fuel for California.
It's delivered wherever the planes are -- say, SFO in San Mateo County -- but the point of sale is Oakland.
Oakland gets all the tax revenue.
Oakland kicks 65 cents of each tax dollar back to United
This article indicates that CA state law was changed in 2008 and Oakland no longer has this deal. Wonder if that will be the resolution in the Illinois legislature.
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Good god, so not only is what they're doing illegal, they couldn't even give it the facade of a legitimate operation?! Pure stupidity.
Hold on!
UAL, American, & the communities involved ALL say that it is legal. Better to wait out the lawsuit than to throw out a word like "Illegal"!
That's what lawyers are for and I'm sure that w/i a few days the backyard lawyers on here will have this thing all figured out saving UA tons of money!
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Quote:
Originally Posted by flyingmusicianlax
Good god, so not only is what they're doing illegal, they couldn't even give it the facade of a legitimate operation?! Pure stupidity.
So, are all companies that incorporate in DE to avoid a bunch of state taxes and conducts transactions in DE rather than POS are conducting business illegally?
I am surprised that the city of Chicago did not work something out with UA to give them comparable tax rates for fuel purchases, considering UA is responsible for billions of dollars of positive economic impact to the city alone.
Sketchy, ethical and illegal are all different terms. This practice is definitely sketchy, it's probably not very ethical, but it may not be illegal. I'm certainly not qualified to judge the latter. There are quite a few of these corporate tax loopholes and exploiting them is not uncommon.
As for the sob story about Chicago transit not getting it's due. I would argue that we should resist this urge to continually raise fees on air travelers. They're already quite high, and the landing fees, airport improvement fees, etc., already fund the airport reasonably well.
So by analogy suppose I buy 50 gallons of milk in a city with a lower sales tax than where I live. Am I supposed to tell the cashier, "say by law I have to pay the sales tax for Colorado Sprimgs and El Paso County, please deduct the city and county tax and I will pay my city and county the taxes myself?"
Nope, what will happen is that the cashier will either say pound sand, or she will say, sure thing, but by law I cannot give you the milk. I have to ship it to you in order to make sure you do not consume the milk in my city and county. And the shipping charges will exceed the POS county and city tax.
Same deal with United. Even if there is a jet fuel supplier willing to truck fuel for less than the difference in jet fuel tax that Chicago and Cook charge, UA can apparently ship fuel itself relatively cheaply.
All those who always pay their local state, county, and city sales tax on stuff they buy in a remote state, county, or city away from their residence can cast the first stone in this thread.
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Quote:
Originally Posted by mre5765
Same deal with United. Even if there is a jet fuel supplier willing to truck fuel for less than the difference in jet fuel tax that Chicago and Cook charge, UA can apparently ship fuel itself relatively cheaply.
Thing is, there is no fuel moving from the office to the airport. The law seems to require that the tax is paid where the "deal" is made, hence the office. The product can come from anywhere, so take the truck and extra shipping costs out of the picture, which improves the economics considerably.
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Thing is, there is no fuel moving from the office to the airport. The law seems to require that the tax is paid where the "deal" is made, hence the office. The product can come from anywhere, so take the truck and extra shipping costs out of the picture, which improves the economics considerably.
Maybe so. Maybe the fuel comes from DuPage county. Since DuPage is not suing then Cook and Chicago have no standing.
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United and American ought tell Springfield and Chicago and the RTA and all these parasites to get screwed, that they are moving their headquarters as rapidly as they can to Texas or somewhere that wants businesses to thrive. Then do it.
Why? Chicago has good infrastructure, that costs money. United is skirting their obligations through a (legal) loophole, which is certainly sketchy. Rather than suing United, they ought to just eliminate the loophole going forward.
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Quote:
Originally Posted by mre5765
So by analogy suppose I buy 50 gallons of milk in a city with a lower sales tax than where I live. Am I supposed to tell the cashier, "say by law I have to pay the sales tax for Colorado Sprimgs and El Paso County, please deduct the city and county tax and I will pay my city and county the taxes myself?"
Nope, what will happen is that the cashier will either say pound sand, or she will say, sure thing, but by law I cannot give you the milk. I have to ship it to you in order to make sure you do not consume the milk in my city and county. And the shipping charges will exceed the POS county and city tax.
Same deal with United. Even if there is a jet fuel supplier willing to truck fuel for less than the difference in jet fuel tax that Chicago and Cook charge, UA can apparently ship fuel itself relatively cheaply.
All those who always pay their local state, county, and city sales tax on stuff they buy in a remote state, county, or city away from their residence can cast the first stone in this thread.
In California on motor vehicle purchases, that's exactly what the state does. I live in Alameda County, but bought my car in a lower sales tax jurisdiction. I had to pay the "fees" (not quite the sales tax) that were equivalent to the sales tax where the car was being registered (my home).
California requires you to do that if you buy a new car out of state and register it in CA within a certain number of months of purchase.
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Quote:
Originally Posted by entropy
Why? Chicago has good infrastructure, that costs money. United is skirting their obligations through a (legal) loophole, which is certainly sketchy. Rather than suing United, they ought to just eliminate the loophole going forward.
Agree. It's just a money grab by Chicago, hoping for a UA settlement. Same thing happened in NJ with Amazon.
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AP reports lawsuit against UA to be filed 1/14 for "sham" fuel purchases office
