NEWSFLASH! Unexpected Liability Under Cook County’s Parking Lot and Garage Operations Tax
Authors: Tara M. Coffman, Esquire
In recent years the Cook County Department of Revenue (“Department”) has begun to actively monitor and strictly enforce its Parking Lot and Garage Operations Tax Ordinance (Code of Ordinances of Cook County, Illinois, Section 74-510 – 74-54) (“Ordinance”). The Ordinance imposes a parking tax upon the use and privilege of parking a motor vehicle in or upon any parking lot or garage in Cook County. The actual amount of tax varies based on the duration of parking and the parking fee imposed by the operator for use of the parking space.
The Ordinance requires every parking lot or garage operator to obtain a parking tax certificate of registration, maintain accurate and complete records showing the number of motor vehicles parked in or on each lot or garage, and maintain the actual lot or garage tax receipts collected from all parking transactions. Operators are then required to file a monthly return, even if no tax is due, and remit all taxes due on or before the 20th of each month.
The Ordinance identifies three exemptions: (i) residential off-street parking where an arrangement for parking is provided in a written agreement between the landlord and tenants; (ii) residential parking provided for condominium occupants pursuant to a written agreement between the condominium association and the owner of the condo; (iii) hospital and medical center employees parking at a parking lot or garage where the hospital or medical center is the operator. Additionally, no tax is due if the fee paid for parking is de minimus, meaning it does not exceed $2.00 for a 24-hour period, $10.00 for a weekly period, or $40.00 for a monthly period.
In recent years the Department has expanded its interpretation of the Ordinance imposing the parking tax along with penalties and interest on property owners for whom the ordinance should not apply. For example, in an administrative law ruling, County of Cook v. North Riverside Park Associates, LLC, the operator argued that they were not subject to the parking tax for low-rate parking because the fees charged were de minimus, but the Department and the administrative law judge found the exception did not apply because the operator could not tie each individual parking space to an individual motor vehicle.
Building Owners and Managers Association of Suburban Chicago (“BOMA”) has released an advocacy statement stating that the Department has attempted to collect tax on parking spaces where no revenue is received by the owner for use of such parking, such as in the suburban office market, is in violation of the Ordinance. Two BOMA members who have been audited received bills for back taxes, interest and penalties totaling in excess of $6,000,000.
Historically the parking tax and property owners were not actively audited by the Department, however, due to these recent changes, those who own property with a parking lot or garage in Cook County must be aware of the requirements under this Ordinance. Audits are also triggered upon sale of property in Cook County that are subject to bulk sales requirements. To obtain a Cook County bulk sale release, the Department reviews the property to determine whether it is subject to the tax, and requires withholding of back taxes, interest and penalties before providing the release.
CONTACT:
Tara M. Coffman, Esquire
tcoffman@satclaw.com
Direct: (312) 554-3103
Andrew J. Annes, Esquire
aannes@satclaw.com
Direct: (312) 554-3110
Websites:
https://satclaw.com/
https://www.satcsolutions.com/
https://www.BridgingChicago.com