Wendella lawsuit claims Chicago special tour boat tax is illegal, unconstitutional

By Jonathan Bilyk | Mar 9, 2019

Mary Fairchild from Chicago, USA [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)]

The company billing itself as Chicago’s “original tour boat company” has asked a Cook County judge to sink City Hall’s attempt to tie down a special tax they say is designed to sidestep court rulings finding the city can’t tax their passenger’s tickets as an “amusement.”

On March 7, Wendella Sightseeing Company filed suit in Cook County Circuit Court against the city of Chicago, saying the city has imposed an illegal tax on them and is using that tax collection to illegally blockade Wendella’s attempt to improve its city dock.

The complaint centers on a letter Wendella said it received on Feb. 1 from the Chicago Department of Transportation in response to Wendella’s request for permission to work on the city dock from which it launches tours and excursions.

According to the complaint, CDOT told Wendella it would not approve those proposed improvements unless the company paid the city “Amusement Tax for the period of Jan. 1, 2017 to the present … paid in full with interest.”

Wendella asserts the letter constitutes an illegal demand to pay a tax “found to be unlawful.”

Wendella has been operating boat tours on the Chicago River and Lake Michigan in Chicago for nearly 85 years, according to its website. The company operates its “Original Architecture Tour,” as well as a “Signature Lake & River Tour,” and various other tours, cruises and excursions.

Wendella also operates water taxis on the Chicago River.

According to the complaint, contention between Wendella and the city over tax collections dates back more than five years to when the city first audited Wendella’s records and placed an initial demand for $3.2 million in unpaid amusement taxes. Essentially, at the time, the city said Wendella owed the money for not collecting the special city tax on tickets it sold for its tours from July 2006-June 2013.

Wendella challenged the tax assessment, asserting it should be exempt from the taxes because it operates tours and cruises exclusively on navigable waterways under the purview of the federal government. The company said this means the tax collection attempts are barred by the federal Maritime Transportation Security Act of 2002 (MTSA).

Wendella said that interpretation was supported by an administrative law judge, and later by a Cook County Circuit Court judge, as well.

However, in 2016, the city enacted a new tax it called a Tour Boat Operator Tax (TBOT). That tax, assessed exclusively on tour boat operators who don’t willingly pay the amusement tax, would be assessed as a 9 percent charge on the passenger revenue collected by the tour boat operator.

However, in its lawsuit, Wendella asserts the tour boat tax also is prohibited by the MTSA. Further, Wendella argues the city, in imposing the tax, has overstepped its authority under the Illinois state constitution.

And Wendella said the city’s attempt to withhold approval of the dock improvements until the allegedly illegal tax is paid violates its rights under federal civil rights laws.

Wendella has asked the judge to declare the city tour boat tax illegal and unenforceable.

Wendella is represented in the action by attorneys Stuart P. Krauskopf, Kurt A. Kauffman and Jamie S. Ritchie, of the firm of Krauskopf Kauffman P.C., of Chicago.

 

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Circuit Court of Cook County City of Chicago Stuart P. Krauskopf Wendella Sightseeing Boats

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