Find Legal Information

Gem Electronics v. Dept. of Rev. (Ill. S.Ct. 10/22/98)

Docket No. 83203-Agenda 15-May 1998.

GEM ELECTRONICS OF MONMOUTH, INC., Appellant, v. THE DEPARTMENT OF REVENUE, Appellee.

Opinion filed October 22, 1998.

JUSTICE NICKELS delivered the opinion of the court:

At issue in this case is whether the Telecommunications Excise Tax Act (35 ILCS 630/1 et seq. (West 1992)) applies to the operation of a community repeater. The Illinois Department of Revenue assessed taxes against Gem Electronics of Monmouth, Inc., under the Telecommunications Excise Tax Act, arising out of its operation of a community repeater. Gem Electronics of Monmouth, Inc. (Gem), sought administrative review of the tax assessment. Following a hearing, the Illinois Department of Revenue (Department) issued a decision upholding the assessment. Gem sought administrative review in the circuit court of Sangamon County. The circuit court set aside the Department's decision, and Department appealed to the appellate court. The appellate court reversed the circuit court, finding Gem liable for the excise taxes. We granted Gem's petition for leave to appeal. 166 Ill. 2d R. 315. We affirm the appellate court and find that operation of a community repeater under the facts in this case falls within the purview of the Telecommunications Excise Tax Act.

I. BACKGROUND

This case involves the application of the Telecommunication Excise Tax Act (the Act) in the setting of two-way FM radio communications through a repeater. The record indicates the following facts. Two-way FM radios are typically used in a combination of a base station and several mobile units. A two-way FM radio, whether a base station or a mobile unit, produces a relatively weak signal. A repeater receives such signals transmitted by a radio, amplifies the signals and allows the signals to be received beyond the original range of the radio. Thus, a repeater effectively extends the distances over which two-way FM radios can communicate.

For example, a taxicab company may maintain contact with its individual cabs via two-way FM radio. The taxicab company would have a dispatcher transmitting signals from a base station. The base station can only transmit over a limited distance and the taxicabs may cover a territory that exceeds that distance. In order to stay in contact with taxicabs that have travelled outside the base station's range, the taxicab company would use a repeater. The repeater would sit on a tower at some point within the range of the base station. It would receive the signals transmitted by the base station, amplify those signals and retransmit the signals to areas outside of the base station's original range. Similarly, the repeater would amplify transmissions from the mobile radios, expanding their range.

Although the Federal Communications Commission (FCC) requires a two-way radio operator to hold a license to operate on a particular frequency, it does not require a repeater operator to secure a license. 47 U.S.C.