United Airlines Sued for Alleged Tax Scam

By allegedly posting fuel purchases using a “sham” office, UAL’s fuel-buying arm pays an 8% sales-tax rate rather than a 9.5% rate, according to a ... StaffJanuary 15, 2013

The Illinois Regional Transportation Authority is alleging in a lawsuit that a United Airlines fuel-purchasing unit used a “sham” office outside Chicago to sidestep taxes on jet fuel, Bloomberg reported today.

In a complaint filed Monday in state court in Chicago, the IRTA charged the unit used an office in Sycamore, Illinois, that has no true sales activity to skirt Chicago taxes. The news service reported the regulator alleges that the office has just one staff member who doesn’t work daily and has no computer.

By posting purchases in Sycamore, the UAL fuel-buying arm pays an 8% sales-tax rate rather than the 9.5% rate for Chicago-based sales, the transportation agency reportedly said in the complaint. The UAL and its unit have allegedly been diverting tax money owed to the agency and other municipalities since 2001, Bloomberg reported, noting that the regulator asked for a court order barring the practice and recovery for unpaid taxes.

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Jennifer Dohm, a representative of United Continental Holdings Inc., United Airlines’s parent company, told the wire service that the lawsuit is “without merit” and that the company would fight the claims.