Mercury Sightseeing Boats, Inc. v. Cnty. of Cook

Decision Date22 May 2019
Docket NumberNo. 1-18-0439,1-18-0439
Citation2019 IL App (1st) 180439,436 Ill.Dec. 376,142 N.E.3d 777
Parties MERCURY SIGHTSEEING BOATS, INC., and Mercury Skyline Yacht Charters, Inc., Plaintiffs-Appellants, v. The COUNTY OF COOK, the Cook County Department of Revenue, and The Cook County Department of Administrative Hearings, Defendants-Appellees.
CourtUnited States Appellate Court of Illinois

Clifford W. Berlow. James T. Malysiak, Andrew D. Hoeg, and Nathaniel K.S. Wackman, of Jenner & Block LLP, of Chicago, for appellants.

Kimberly M. Foxx, State’s Attorney, of Chicago (Cathy McNeil Stein, Martha Victoria Jimenez, and James Beligratis, Assistant State’s Attorneys, of counsel), for appellees.

JUSTICE ELLIS delivered the judgment of the court, with opinion.

¶ 1 After defendant, the Cook County Department of Revenue (DOR), assessed a tax against plaintiffs, Mercury Sightseeing Boats, Inc., and Mercury Skyline Yacht Carriers, Inc. (collectively, Mercury), Mercury's attorney contacted DOR to confirm the deadline to file a protest. The DOR auditor assigned to the matter told Mercury it had 20 days from the date Mercury received the notice, which the auditor equated to October 1, 2014.

¶ 2 Not so, as it turned out: Mercury's deadline was September 29. But Mercury followed DOR's advice and filed its protest on October 1.

¶ 3 Nothing was said of this until the administrative law judge (ALJ) assigned to the protest hearing pointed it out to the parties. But the ALJ ruled that DOR had forfeited any timeliness objection and proceeded to the merits of the matter, ultimately ruling in favor of Mercury.

¶ 4 The trial court, on administrative review, likewise found that Mercury had blown the 20-day deadline but, unlike the ALJ, determined that the deadline was "jurisdictional" in nature and thus could not be forfeited. So without considering the merits of the final administrative decision, the trial court reversed and ordered that judgment be entered in DOR's favor.

¶ 5 We agree with the trial court that the 20-day time limitation was "jurisdictional," in that it was a limitation on the administrative body's authority to hear protests. As this protest was not filed within the 20-day window, the administrative body lacked authority to hear it. But we hold that DOR violated the procedural due process rights of Mercury by affirmatively misleading Mercury, if unintentionally, on the proper deadline for filing. The proper remedy for that constitutional violation is to allow Mercury its hearing on the merits. We thus vacate the trial court's ruling and remand for a consideration of that administrative decision on the merits.


¶ 7 Mercury was founded in the 1930s by a Portuguese immigrant named Arthur Agra. Since that time, Mercury has continued to operate as a family business, running a fleet of ubiquitous boats that provide, among other things, educational architecture tours along the Chicago River and Lake Michigan.

¶ 8 In 1996, Cook County enacted an amusement tax (Amusement Tax) that imposed against "patrons of every amusement" a 3% tax on the admission fee paid "for the privilege to enter, to witness or to view such amusement." Cook County Code of Ordinances § 74-392(a) (approved Nov. 22, 1996) (Code). From 1996 until 2014, DOR never assessed the Amusement Tax against Mercury. In fact, in an October 6, 2000, letter from then director of revenue to an unspecified recipient, DOR stated, "it has been and still is the County's position that both sightseeing cruises and water taxi services are not amusements as defined in the Ordinance and, therefore, are not subject to the tax."

¶ 9 In 2014, DOR shifted course. In July of that year, a DOR auditor initiated a tax discovery investigation of Mercury to "verify [its] compliance with the Cook County Amusement Tax." The auditor ultimately determined that, notwithstanding DOR's prior position, it now determined "that the Amusement tax applies to operators of tour boats, trolley tours, etc." In August 2014, on multiple occasions, the auditor contacted Mercury and demanded that it register to collect the tax and remit payment for taxes due for May and June 2014.

¶ 10 Afterwards, Mercury and DOR participated in two phone conferences. During the first call, Mercury requested time to review DOR's assessments. At the second conference, Mercury expressed its belief that, as applied to Mercury, the tax was preempted by federal law.

¶ 11 DOR responded by issuing an "Amusement Tax Delinquency Notice of Jeopardy Tax Determination and Assessment" to Mercury. The notice was dated September 9, 2014. At the bottom of the page was a stamp that read in all caps and bold: "MAILED SEP 09 2014." It is undisputed that Mercury did not receive this notice until September 11, 2014.

¶ 12 This notice advised Mercury that it had "not remitted the tax due for the period(s) below," namely May through July 2014. It requested that Mercury remit payment by September 26, 2014, and that interest would continue to accrue until the liability was paid in full. It advised Mercury that if it believed that its tax liability was different than as indicated on the notice, it could complete the form on the reverse side of the notice along with supporting documentation. The notice further advised Mercury that if payment was not received by September 26, 2014, DOR would "schedule an Administrative Hearing and refer the matter to a collection agency."

¶ 13 On September 17, in response to a request by Mercury, the DOR auditor e-mailed Mercury a form titled "Protest and Petition for Hearing." By all appearances, it was a standard form to be filled out by taxpayers seeking to file a protest. It provided that the protestor (who was required to fill in its name and address) "hereby protests its assessment for (fill in the tax type) concerning the following periods: (fill in relevant time period) and hereby files a petition for hearing on these matters." It goes on to read:

"The petitioner's notice of the County's tax determination and assessment in the amount of $__________ was delivered/mailed on __________, and as such Petitioner hereby files this petition within twenty days thereof pursuant to SECTION 34A of the Uniform Penalties, Interest and Procedures Ordinance of Cook County. State the reasons for the protest below. ***"

¶ 14 On September 23, 2014, Mercury's attorney sent the auditor an e-mail stating, "Please confirm the due date for the protests, based on our receipt on September 11, the due date would be October 1, 2014. Please confirm[.]" On September 24, the auditor responded, stating:

"That is correct.
The taxpayer receiving an assessment has 20 days from the date of receipt to file a protest and petition for hearing. Your receipt date was September 11, 2014. Thus, the due date to file the protest is October 1, 2014. " (Emphasis in original.)

¶ 15 On October 1, Mercury filed its protest. In response, DOR forwarded Mercury's protest to the Cook County Department of Administrative Hearings (DOAH), Cook County's administrative body for hearing such protests. DOAH then scheduled a hearing.

¶ 16 Mercury raised four arguments before DOAH: (1) its architecture boat tours and sightseeing cruises were not "amusements" as defined in the Code and thus were not subject to the tax; (2) even if they were "amusements," they were exempt from the tax as "live cultural performance[s]"; (3) as applied to Mercury, the amusement tax was preempted by 33 U.S.C. § 5(b) (2012) ; and (4) applying the tax to Mercury would violate the equal protection clause of the fourteenth amendment and the uniformity clause of the Illinois Constitution.

¶ 17 On July 6, 2015, DOR filed its response to Mercury's protest. DOR contested each of Mercury's arguments but never argued or suggested that Mercury's protest was untimely.

¶ 18 On July 19, 2016, the ALJ issued an opinion and decision. The ALJ ruled that, as applied to Mercury, the amusement tax was preempted by 33 U.S.C. § 5(b) (2012). In the course of its ruling, the ALJ sua sponte noted that Mercury's protest was not timely filed under section 34-80(a) of the Code (Cook County Code of Ordinances § 34-80(a) (approved Feb. 16, 2011)), but it ruled that DOR forfeited any timeliness argument by failing to raise it at the hearing.

¶ 19 On August 16, 2016, DOR filed a complaint for administrative review in the circuit court. In its complaint, DOR argued for the first time that Mercury's protest was untimely, and thus DOAH lacked jurisdiction to hear the petition.

¶ 20 The circuit court ruled that Mercury's protest was untimely under section 34-80(a). More importantly, the court found that the 20-day deadline in section 34-80(a) was jurisdictional, which meant that the deadline was not subject to forfeiture. As a result, the court held that DOAH lacked authority to hold a hearing on Mercury's protest and deemed the ALJ's opinion and decision "void." This timely appeal followed.


¶ 22 Mercury's principal argument on appeal is a constitutional one—that DOR violated Mercury's right to procedural due process by mistakenly identifying a protest deadline that was later than the actual deadline, thereby lulling Mercury into an untimely filing. While Mercury is free to lead with its constitutional argument, we are not. We must avoid constitutional questions whenever possible and first consider all other arguments. People v. Alcozer , 241 Ill. 2d 248, 253, 350 Ill.Dec. 1, 948 N.E.2d 70 (2011) ("It is well settled that courts should avoid constitutional questions when a case may be decided on other grounds."). So we begin with the nonconstitutional arguments. There are three.

¶ 23 I

¶ 24 First, Mercury argues that its protest was timely under what it deems DOR's prior, longstanding interpretation of section 34-80(a)—that a protest was timely under section 34-80(a) if it was filed within 20 days of the taxpayer's receipt of the notice. Mercury says we should not accept DOR's newfound interpretation, which it portrays as a convenient,...

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