Officials sue major airlines over jet fuel taxes

    8:00 AM, Jan 15, 2013   |    comments
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    UNDATED (CNN) -- Two major airlines are accused of avoiding paying higher taxes to the city of Chicago and Cook County, by running what the Regional Transit Authority calls a sham.

    The agency says action by both airlines is costing them much-needed funding.

    They are two of the largest in the world, yet, when it comes to buying jet fuel, United and American turn to Sycamore, Illinois. The rural town 55 miles west of Chicago is the home to two small offices that both airlines use as its locaiton to buy hundreds of millions of dollars worth of fuel. Jordan Matyas, RTA Chief of Staff, says, "This is not where anyone is negotiating multi-million dollar agreements or buying a million dollars a day worth of jet fuel; this is just a sham."

    The Regional Tranpsortation Authority, known as the RTA, is accusing United and American of operating sham offices in Sycamore to avoid paying millions of dollars worth of sales tax in Chicago and Cook County. The RTA relies on sales tax to fund Metra, CTA and PACE. The RTA says, since 2005, the airlines' practice has cost the RTA $96 million. Matyas says, "When you're re looking at CTA raising fares today, when you're looking at the fares that were raised on Metra just last year, that's all money that could have reduced that increase or gone to other operational needs."

    The RTA is suing United and will add American to the lawsuit once the airline emerges from bankruptcy.

    While its coprorate headquarters are in the Willis Tower, United's jet fuel operation is in this small Sycamore building shared by a law office and a chiropractor. This woman is the only employee working in the office.

    American shares space in the Sycamore City Hall, also a one-woman operation. Matyas says, "The law says you need to pay sales tax where there was acceptance. So you have to look, where was it negotiated? Where was it paid for? Where was it used? Nothing happened in Sycamore."

    Through written statemetns, United, American and the city of Sycamore all say what they are doing is legal under state law.

    And while they haven't seen any set fuel in Sycamore, some local residents have no problem with the big airlines doing business here. Maytas says, "If we want to keep flying for lower costs, we've got to do what we can, right?"

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