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Chicago SMSA Limited Partnership v. Dept. of Revenue

Case Date: 07/29/1999
Court: 1st District Appellate
Docket No: 1-98-3565

Chicago SMSA Limited Partnership v. Dept. of Revenue, Nos. 1-98-3565, 1-99-1114, Cons.

1st District, July 29, 1999

FOURTH DIVISION

CHICAGO SMSA LIMITED PARTNERSHIP, CYBERTEL CELLULAR TELEPHONE COMPANY, ILLINOIS RSA 6 & 7, and ILLINOIS SMSA LIMITED PARTNERSHIP,

Plaintiffs-Appellants,

v.

ILLINOIS DEPARTMENT OF REVENUE and KENNETH ZEHNDER, in his Official Capacity as Director of the Illinois Department of Revenue,

Defendants-Appellees.

 APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY.

95 L 51110

HONORABLE ALEXANDER P. WHITE, JUDGE PRESIDING.

JUSTICE WOLFSON delivered the opinion of the court:

The taxpayers in this case are cellular telephone service providers. They pose a 1.4 million dollar question: do the words "exclude from active regulatory oversight" in one statute have the same meaning as "not regulated" in another? If they do, the taxpayers do not have to pay the invested capital tax assessed by the Illinois Department of Revenue.

We conclude the phrases in the two statutes were not intended to mean the same thing. For that and other reasons, we affirm the trial court's orders requiring the taxpayers to pay the Department of Revenue's assessments.

FACTS

Chicago SMSA Limited Partnership, Cybertel Cellular Telephone Company, Illinois RSA 6 & 7, and Illinois SMSA Limited Partnership (collectively, taxpayers) are federally licensed cellular telephone service providers. Cellular telephones use radio waves to receive and transmit messages across small "switching sites" scattered throughout the service area. The cellular industry began modestly in the 1980s with 100,000 nationwide customers by 1984, but exploded in the 1990s with approximately 16 million nationwide customers by 1994. Unlike traditional land-based telephone service industry, the cellular industry is marked by robust competition among providers.

In 1985, the Illinois General Assembly recognized this competition and responded by prohibiting the Illinois Commerce Commission (ICC) from restricting market entry of federally licensed cellular providers, and empowered the ICC to exclude such providers from "active regulatory oversight." 220 ILCS 5/13-203 (West 1996).

On February 18, 1987, the ICC entered an order on Chicago SMSA Limited Partnership's "Petition for rulemaking with respect to exclusion of cellular radio service from active regulatory oversight." See 81 P.U.R.4th 287, 1987 Ill. PUC LEXIS 10 (February 18, 1987). The ICC concluded the cellular industry in Chicago should be removed from active regulatory oversight. 1987 Ill. PUC LEXIS at 59-60. The ICC later extended this order to the entire cellular industry. See 83 Ill. Admin. Code