A Chicago tour boat company is asking a Cook County circuit judge to rule a Cook County administrative law judge was right to say the county can’t apply an amusement tax on the company’s Chicago River and Lake Michigan boat tours, but to find the administrative law judge did so for the wrong reason – a move which could also spell taxing trouble for the operators of Chicago’s walking tours. 

On Aug. 23 in Cook County Circuit Court, Mercury Skyline Yachts Charters and Mercury Sightseeing Boats filed, as a “protective measure,” a request for an administrative review, which asked that a judge review a ruling by a Cook County administrative law judge, regarding Mercury’s protest against an amusement tax the county sought to impose on Mercury. 

Mercury operates seven boats that are used for cruises on Lake Michigan and architectural tours along the Chicago River. On the architectural tours, Chicago Architecture Foundation guides provide commentary. On four of the six non-architectural sightseeing cruises, Mercury crew members provide commentary; there is no commentary for the other two. 

The Cook County Department of Revenue tried to impose an amusement tax on Mercury in September 2014, but Mercury protested the tax violated the equal protection guarantees of the Illinois and United States’ constitutions, because the county did not tax walking tours of city landmarks. Mercury also claimed their boat tours should be considered “live entertainment” and thus be exempt from the tax. 

Mercury had a hearing before a county administrative law judge in February 2016. According to Mercury’s court filing, the county administrative law judge ruled July 19 the tax should apply to Mercury’s architectural tours and to four of the sightseeing cruises that come with commentary; it did not apply to the two cruises without commentary. Nevertheless, the judge said Mercury was totally exempt under the U.S. Maritime Transportation Safety Act of 2002, which prohibits – except in limited circumstances – non-federal agencies from taxing vessels that travel on navigable waters under federal authority.  

The administrative law judge did not address Mercury’s constitutional argument. 

Mercury was apparently glad it did not have to pay the tax, but was unhappy with the finding its operations were considered “amusement,” and the possibility that, if not for the overriding federal law, the company would have needed to fork over the tax. 

Seeking other legal ground on which to stand, Mercury visited circuit court last week, asking a circuit judge to affirm the administrative law judge’s decision finding the tours and cruises are not taxable, but to reject the grounds the administrative judge cited in arriving at that decision. 

In addition, Mercury wants a review of its constitutional argument.

The county Department of Revenue has also asked a circuit court judge to overturn the administrative law judge’s ruling that the Maritime Act bars the county from assessing the amusement tax. Further, the department is trying to head off Mercury’s request for review in circuit court by contending Mercury should never have had a county administrative hearing in the first place, because Mercury missed the filing deadline for the hearing. 

Mercury countered it did file in time and the administrative law judge agreed. Mercury is arguing the department has no right to now maintain Mercury was tardy for the administrative hearing, given the department didn’t raise the issue at the hearing. 

The court documents do not indicate how much potential tax money is at stake in the legal actions. 

Mercury is represented by the Chicago firm of Jenner & Block. A status hearing is set for Oct. 18 before Circuit Judge Ann Collins-Dole.

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