Chicago-area RTA: United running 'sham' business

Discussion in 'United Airlines | MileagePlus' started by sobore, Jan 14, 2013.  |  Print Topic

  1. sobore
    Original Member

    sobore Gold Member

    Messages:
    12,421
    Likes Received:
    33,847
    Status Points:
    16,520
    http://www.twincities.com/ci_22368649/chicago-area-rta-united-running-sham-business.html

    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.

    The Regional Transportation Authority 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 situs (location) for fuel sales in a lower taxing jurisdiction," reads a draft of the lawsuit obtained by The Associated Press.

    United officials say they have not seen the lawsuit, but that the Sycamore operation is legal.
    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.

    http://www.twincities.com/ci_22368649/chicago-area-rta-united-running-sham-business.html
     
  2. thebkwee

    thebkwee Silver Member

    Messages:
    579
    Likes Received:
    765
    Status Points:
    795
    Maybe they use those fancy portable computers?
     
  3. thepointstraveler

    thepointstraveler Silver Member

    Messages:
    286
    Likes Received:
    226
    Status Points:
    425

    I saw this this morning too. Should be interesting to see how this plays out. American Airlines is being accused of doing the same thing but is not included in the lawsuit since they are in bankruptcy still.
     
  4. thepointstraveler

    thepointstraveler Silver Member

    Messages:
    286
    Likes Received:
    226
    Status Points:
    425
    You mean to tell me that we have now invented portable computers! What will they come up with next? LOL
     
    Olton Hall and Golden Toque like this.
  5. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,507
    Likes Received:
    20,199
    Status Points:
    16,520
    They were using cloud computing in that office.
     
    8MiHi likes this.
  6. sobore
    Original Member

    sobore Gold Member

    Messages:
    12,421
    Likes Received:
    33,847
    Status Points:
    16,520
    It all looks legitimate to me ;) :

    [​IMG]
     
  7. Weatherboy

    Weatherboy Gold Member

    Messages:
    4,215
    Likes Received:
    7,470
    Status Points:
    5,245
    When I saw this online this morning, I was thinking funny thoughts of all the things that could be labeled a "sham" at UA above/beyond this fuel stuff. (And the fuel stuff sounds more like a shenanigan than a sham.)
     
    Golden Toque and Flyer1976 like this.
  8. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,507
    Likes Received:
    20,199
    Status Points:
    16,520
    Are they going to hire the sham wow guy for the pre-flight infomercials now?

    http://en.wikipedia.org/wiki/Vince_Offer
     
    Flyer1976 and sobore like this.
  9. Wandering Aramean
    Original Member

    Wandering Aramean Gold Member

    Messages:
    28,233
    Likes Received:
    61,782
    Status Points:
    20,020
    I am curious about the timing of the lawsuit. This is hardly new news that UA and AA do this. Why all of a sudden is it time to sue? Did the RTA suddenly start reading the news from 2 years ago or something??

    The part where they aren't filing against AMR due to the bankruptcy is also entertaining. Presumably that suit will be filed once the company exits bankruptcy and has assets to go after.
     
  10. unavaca
    Original Member

    unavaca Gold Member

    Messages:
    8,547
    Likes Received:
    11,224
    Status Points:
    14,495
    HaveMilesWillTravel likes this.
  11. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,507
    Likes Received:
    20,199
    Status Points:
    16,520
    Hot nuts, I hope.
     
    unavaca likes this.
  12. lhrsfo
    Original Member

    lhrsfo Silver Member

    Messages:
    183
    Likes Received:
    139
    Status Points:
    375
    And when they lose the lawsuit, perhaps a move of Head Office to Houston will be in order?
     
    8MiHi and Misplaced Texan like this.
  13. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,507
    Likes Received:
    20,199
    Status Points:
    16,520
    After last year's fight over international flights from HOU?
     
  14. JC1120

    JC1120 Silver Member

    Messages:
    351
    Likes Received:
    285
    Status Points:
    545
    Most of the public has forgotten about that, so the main issue would be the cost of the move itself (plus the fact that they supplanted so many families already).
     
    LETTERBOY likes this.
  15. CDKing
    Original Member

    CDKing Gold Member

    Messages:
    2,933
    Likes Received:
    5,553
    Status Points:
    4,045
    Its a joke. Imaging how backed up the legal system would be if everyone was sued for taking advantage of tax/legal loopholes. How about all those companies that incorporate in Delaware?
     
  16. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,507
    Likes Received:
    20,199
    Status Points:
    16,520
    Uhmm... do you think I could rent a mailbox in Reno, give that to my employer as my new mailing address, and ask to not have California state income tax withheld? ;)
     
    CDKing and Flyer1976 like this.
  17. Flyer1976
    Original Member

    Flyer1976 Gold Member

    Messages:
    28,247
    Likes Received:
    33,912
    Status Points:
    20,020
    The RTA needs to focus on their admin costs if they're bleeding money instead of going on a wild goose chase. :rolleyes:
     
    Billiken and LETTERBOY like this.
  18. KenInEscazu

    KenInEscazu Gold Member

    Messages:
    1,548
    Likes Received:
    1,935
    Status Points:
    1,120
    I applaud any effort UA makes to keep their costs down (short of cutting corners on maintenance). IL, and Chicago in particular, is well known to have abusively high tax rates. I'm sure that UA has at least one attorney on their staff ;) , and he probably studied the law, presented the risks and the decision was made accordingly.

    It will be interesting to see if the slam dunk win for IL in an IL court will stand in the appeals process. I'm no attorney, so I dont know where exactly it will be tried, nor do I know where it will go in the appeals process. I am sure, however, that it WILL be appealed. Unless, of course, an out of court settlement is reached. That's probably all the state really wants anyway.
     
    Billiken likes this.
  19. guberif

    guberif Silver Member

    Messages:
    686
    Likes Received:
    1,060
    Status Points:
    825
    CDKing beat me to the punch with the Delaware comment....welcome to big business.
     
    LETTERBOY likes this.
  20. rehoult
    Original Member

    rehoult Gold Member

    Messages:
    595
    Likes Received:
    1,890
    Status Points:
    1,020
    I know you probably mean this sarcastically, but if the tax law in question is based on residency and not location of work, then you'd be entirely in the right. I can certainly tell you from the perspective of a trust company that where the securityholder is located is significantly more important to us than the where the company they've invested in is located.

    This case should be very open and shut, regardless of what direction it goes. Either Chicago wrote a requirement to self-assess the tax on goods imported into and subsequently used in the jurisdiction (in which case the suit isn't actually for running a sham, it's for filing an incorrect tax return) or they didn't write such a requirement into the law (in which case UA will promptly tell them to go piss into the wind and then they can have their legal department re-write their terribly drafted law).
     
    LETTERBOY likes this.
  21. Seacarl
    Original Member

    Seacarl Gold Member

    Messages:
    10,521
    Likes Received:
    11,372
    Status Points:
    16,520
    It is pointless to sue someone who is in bankruptcy. The trial is handled in BK court and even if you were to prevail you'd be an unsecured creditor. After AMR exits, they can probably only sue to force them not to avoid tax in the future, but not for amounts not paid while in BK - I think those kinds of liabilities are discharged in the BK proceeding.

    The practice of avoiding this tax is, I believe, widely practiced in IL
     
  22. unavaca
    Original Member

    unavaca Gold Member

    Messages:
    8,547
    Likes Received:
    11,224
    Status Points:
    14,495
    "abusively high tax rates"? What? IL's tax rate is only 9.5%, just slightly higher than CA's ~9%.
     
  23. HaveMilesWillTravel
    Original Member

    HaveMilesWillTravel Gold Member

    Messages:
    12,507
    Likes Received:
    20,199
    Status Points:
    16,520
    I believe it's based on the location of work. I'd be doing my work in my mailbox ;)
     
  24. KenInEscazu

    KenInEscazu Gold Member

    Messages:
    1,548
    Likes Received:
    1,935
    Status Points:
    1,120
    But much higher than Texas' 0%. :D
     
  25. Mike Reed

    Mike Reed Gold Member

    Messages:
    2,414
    Likes Received:
    3,574
    Status Points:
    2,025
    Incorrect. While there is no state income tax, the sales tax varies by location and ranges from 6.5 - 8.5%, just under the 9.5% in Illinois. Note that that's just Sales Tax and not any additional tax either state charges on fuels.

    Right or wrong, if UA is able to shave 2-3 points off fuel costs, that's HUGE in terms of operational savings.
     
    Mackieman and LETTERBOY like this.

Share This Page