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Hercules, Inc. v. Department of Revenue

Case Date: 06/29/2001
Court: 1st District Appellate
Docket No: 1-00-0433 Rel

FIRST DIVISION
June 29, 2001




HERCULES, INCORPORATED,

                         Plaintiff-Appellant,

          v.

THE DEPARTMENT OF REVENUE, and KENNETH E.
ZEHNDER, Director of the Department of Revenue,

                         Defendants-Appellees.

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)		 Appeal from the
Circuit Court of
Cook County
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Honorable
Joanne L. Lanigan,
Judge Presiding.

JUSTICE O'MARA FROSSARD delivered the opinion of the court:

Plaintiff, Hercules, Inc., appeals the order of the circuit court affirming the Department ofRevenue's (Department) finding that plaintiff owes taxes on a $1.3 billion capital gain it earned in1987. On April 1, 1999, the circuit court entered a judgment against Hercules for $950,472 in tax,$630,200 in penalties and $921,161 in interest through March 1, 1999.

In 1991, the Department issued to plaintiff a notice of business income tax deficiency. TheDepartment determined that Hercules' capital gain from the sale of stock in Himont, a publicallytraded corporation, constituted business income apportionable to Illinois. Plaintiff filed a protest andreceived a hearing before an administrative law judge (ALJ). The ALJ recommended that theDepartment sustain the notice of tax deficiency, concluding that all the capital gains from the saleof the stock constituted apportionable business income. The Director of the Department adopted theALJ's decision. Plaintiff then sought administrative review, and the circuit court affirmed theDepartment's decision. Plaintiff moved for reconsideration and the circuit court granted the motion,and vacated its prior decision and order. However, the circuit court again affirmed the Department'sdecision "*** based upon different applications of the law to the facts from those espoused by theadministrative law judge."

On appeal, plaintiff raises three issues for review: (1) that the imposition of the Illinoisincome tax on its capital gain from the sale of the Himont stock violates the due process clause andthe commerce clause of the United States Constitution. (U.S. Const., art. I,