                           ILLINOIS OFFICIAL REPORTS
                                        Appellate Court




    Witte Brothers Exchange, Inc. v. Department of Revenue, 2013 IL App (1st) 120850




Appellate Court            WITTE BROTHERS EXCHANGE, INCORPORATED, Plaintiff-
Caption                    Appellee, v. THE DEPARTMENT OF REVENUE, BRIAN HAMER, as
                           Director of Revenue, and DAN RUTHERFORD, as Treasurer of the State
                           of Illinois, Defendants-Appellants.



District & No.             First District, Sixth Division
                           Docket No. 1-12-0850


Filed                      September 30, 2013
Rehearing denied           November 1, 2013


Held                       In an action arising from an income tax audit of plaintiff interstate
(Note: This syllabus       trucking company, the appellate court reversed the trial court’s
constitutes no part of     determination that the Department of Revenue could not tax the
the opinion of the court   company’s “pass-through” miles, the miles driven through Illinois
but has been prepared      without picking up or delivering goods, in apportioning the company’s
by the Reporter of         income to Illinois, since plaintiff’s trucks and employees had a physical
Decisions for the          and economic presence in Illinois while passing through; therefore, the
convenience of the         pass-through miles were “in this State” for purposes of the Income Tax
reader.)
                           Act.


Decision Under             Appeal from the Circuit Court of Cook County, No. 11-L-50282; the
Review                     Hon. Robert Lopez Cepero, Judge, presiding.



Judgment                   Reversed and remanded.
Counsel on                   Lisa Madigan, Attorney General, of Chicago (Michael A. Scodro,
Appeal                       Solicitor General, and Laura Wunder, Assistant Attorney General, of
                             counsel), for appellants.

                             David M. Rownd and Brittany E. Kirk, both of Thompson Coburn LLP,
                             of Chicago, for appellee.


Panel                        JUSTICE REYES delivered the judgment of the court, with opinion.
                             Presiding Justice Rochford and Justice Hall concurred in the judgment
                             and opinion.



                                                OPINION

¶1           Plaintiff-appellee Witte Brothers Exchange, Inc. (Witte Brothers or plaintiff), an
        interstate trucking company, initiated this action against defendants-appellants the Illinois
        Department of Revenue, Brian Hamer as its director, and Dan Rutherford as Treasurer of the
        State of Illinois (collectively the Department) to recover funds submitted under protest
        following an audit during which the Department concluded Witte Brothers failed to include
        in the numerator of its apportionment factor the miles driven through Illinois without picking
        up or delivering goods, otherwise known as pass-through miles.1 The trial court granted
        plaintiff’s motion for summary determination and concluded the Department could not tax
        pass-through miles under section 304(d)(1) of the Illinois Income Tax Act (Tax Act) (35
        ILCS 5/304(d)(1) (West 2010)). The Department appeals, contending the trial court erred in
        granting summary determination because the language of section 304(d)(1) demonstrates
        pass-through miles are revenue miles “in this State,” and thus the appropriate taxes were
        assessed in this matter. For the reasons which follow, we reverse the determination of the
        trial court.

¶2                                        BACKGROUND
¶3          In 2009, the Department audited plaintiff for the tax years ending September 30, 2005,
        September 30, 2006, and September 30, 2007. On December 7, 2009, the Department
        forwarded to plaintiff a notice of proposed deficiency which stated plaintiff owed $77,281
        in unpaid income tax plus a penalty of $11,592 because plaintiff failed to include pass-

                1
                  “In apportioning the income of multistate, unitary businesses operating within this state,
        Illinois uses a formula approach known as ‘formula apportionment.’ Under this system, the income
        of the business is calculated, and a formula is applied to apportion that sum based upon the ratio of
        the taxpayer’s activities in Illinois to its activities everywhere.” Texaco-Cities Service Pipeline Co.
        v. McGaw, 182 Ill. 2d 262, 274 (1998).

                                                     -2-
     through miles in the numerator of the apportionment factor as required in section 304(d)(1)
     of the Tax Act. The relevant portion of section 304(d)(1) states:
         “Such business income (other than that derived from transportation by pipeline) shall be
         apportioned to this State by multiplying such income by a fraction, the numerator of
         which is the revenue miles of the person in this State, and the denominator of which is
         the revenue miles of the person everywhere. For purposes of this paragraph, a revenue
         mile is the transportation of 1 passenger or 1 net ton of freight the distance of 1 mile for
         a consideration.” (Emphasis added.) 35 ILCS 5/304(d)(1) (West 2010).
¶4       On January 31, 2011, the Informal Conference Board rendered its decision that no
     amendments would be made to the plaintiff’s proposed tax adjustment. The decision stated:
              “The ICB concludes the following: 1. In that Witte Bros. Exchange, Inc. is carrying
         on its interstate transportation service business in Illinois when passing through Illinois,
         via Illinois highways, every Illinois ‘pass-through mile’ has nexus with Illinois. The
         requisite nexus is supplied if a corporation avails itself of the substantial privilege of
         carrying on business within the taxing state. [Citation.] Traversing Illinois, via Illinois
         highways, without an Illinois pick-up or delivery is the exercise of that privilege. 2. In
         that Witte Bros. Exchange, Inc. derived income from its customers while hauling freight
         across Illinois, its Illinois ‘pass-through miles’ are ‘revenue miles of the person in this
         State’ and are included in the Witte Bros. Exchange, Inc. transportation apportionment
         factor numerator as required by 35 ILCS 5/304(d)(1).”
¶5       On February 8, 2011, the Department forwarded to plaintiff a notice of audit results
     requesting payment of $77,282 in unpaid taxes, $35,836 in interest, and $23,185 in penalties
     for a total payment of $136,303. Plaintiff timely paid the assessment, but did so under
     protest.
¶6       On March 16, 2011, plaintiff filed a complaint in the law division of the circuit court of
     Cook County against the Department pursuant to the State Officers and Employees Money
     Disposition Act (Protest Monies Act) (30 ILCS 230/1 et seq. (West 2010)). Plaintiff sought
     a preliminary injunction, abatement of penalty fees and interest, a determination that the
     income tax was erroneously assessed, and a declaration that the Tax Delinquency Amnesty
     Act (35 ILCS 745/3-1 et seq. (West 2010)) is unconstitutional.2
¶7       The trial court granted plaintiff a preliminary injunction restraining the Department from
     transferring plaintiff’s payment out of the protest fund pending a final disposition in the case.
     Plaintiff then filed a motion for summary determination pursuant to section 2-1005(d) of the
     Code of Civil Procedure (Code) (735 ILCS 5/2-1005(d) (West 2010)) seeking a ruling on
     whether the Department used the proper method to calculate its Illinois tax liability. Relying
     on Northwest Airlines, Inc. v. Department of Revenue, 295 Ill. App. 3d 889, 894 (1998),


            2
              Plaintiff filed a supplemental complaint pursuant to the Protest Monies Act regarding an
     additional payment of $5,600 it was required to pay by the Department. The supplemental complaint
     contained two additional counts: a request for an injunction, which was granted; and a claim
     asserting section 3-3(b-20)(2) of the Uniform Penalty and Interest Act (35 ILCS 735/3-3(b-20)(2)
     (West 2010)) is unconstitutional, which was withdrawn.

                                               -3-
       which ruled an airline was not required to pay taxes under section 304(d)(1) when its
       airplanes did not depart or land in Illinois, but merely flew over the state, plaintiff maintained
       these flyover miles were identical to pass-through miles and therefore plaintiff correctly
       excluded these miles from the numerator of the apportionment factor. In comparing flyover
       miles to pass-through miles, plaintiff argued the logical result is that airplanes, which do not
       take off from or land in Illinois, are not taxed for flyover miles. Therefore, plaintiff
       concluded, trucks which do not pick up or deliver goods in Illinois should not be taxed on
       pass-through miles. Plaintiff further argued the Illinois General Assembly’s 2007 amendment
       of section 304 of the Tax Act supports the argument that pass-through miles were not
       intended to be included in the numerator of the apportionment factor for taxes incurred prior
       to December 31, 2008, because the General Assembly added section 304(d)(3), which
       expressly included pass-through miles as miles driven in Illinois after December 31, 2008.
¶8         In response, the Department contended Illinois pass-through miles must be included in
       the numerator of the apportionment factor because the statute provides the numerator shall
       be “the revenue miles of the person in this State.” 35 ILCS 5/304(d)(1) (West 2010). A
       “revenue mile” is defined by the statute as the “transportation of 1 passenger or 1 net ton of
       freight the distance of 1 mile for a consideration.” Id. The Department argued the purpose
       of section 304(d)(1) is to apportion to Illinois that part of a multistate taxpayer’s income
       reflecting the amount of income earned in Illinois over the amount of income earned
       everywhere. Excluding pass-through miles would create “nowhere income,” which is
       essentially income that is taxed by no state and would be contrary to the goal of full
       apportionment. The Department distinguished the holding in Northwest Airlines, arguing the
       case was considered on constitutional grounds and not based on the statutory construction
       of section 304(d)(1). Lastly, the Department contended the amendments to section 304 were
       clarifications and any other interpretation would be contrary to full apportionment.
¶9         In reply, plaintiff asserted the General Assembly created two distinct formulas when
       amending section 304 to include section 304(d)(3). Therefore, plaintiff argued, it is against
       statutory construction and impossible for section 304(d)(1) and section 304(d)(3) to have the
       same interpretation.
¶ 10       After the matter was fully briefed, the trial court set plaintiff’s motion for summary
       determination for oral argument. On the date of hearing, the trial court extended the briefing
       schedule, allowing both parties to file a supplemental response and supplemental reply.3
¶ 11       The Department’s sur-response indicated the trial court instructed the parties to address
       the meaning of the phrase “in this State.” The Department responded “in this State” is not
       defined and therefore should be given its plain and ordinary meaning. It concluded, “in this
       State” means miles driven on Illinois roads. Further, the Department compared the Tax Act’s
       use of “in this State” to other statutes which use the same phrase and determined all mean
       “in Illinois.”
¶ 12       Plaintiff’s sur-reply contended “in this State” is a modifier for the phrase preceding it,


                 3
                     No record of proceedings for any of the trial court hearings was included in the record on
       appeal.

                                                       -4-
       “revenue miles of the person.” Thus, the question is not whether the trucks traveled “in this
       State,” but whether plaintiff derived revenue from the pass-through miles. Plaintiff stated the
       concept of “revenue miles” in section 304(d)(1) applies only when the taxpayer is required
       to come into the state to pick up or deliver goods. Plaintiff included these miles in the
       numerator of the apportionment factor.
¶ 13       On February 16, 2012, the trial court entered an order granting plaintiff’s motion and
       stating “the Illinois Department of Revenue cannot tax Pass-through Miles under 35 ILCS
       5/304(d)(1).” The preliminary injunction orders were dissolved and the State Treasurer was
       directed to return plaintiff’s funds submitted under protest. The trial court order was stayed
       pending appeal. On March 15, 2012, the Department timely filed this appeal. We have
       jurisdiction pursuant to Illinois Supreme Court Rule 301. Ill. S. Ct. R. 301 (eff. Feb. 1, 1994).

¶ 14                                        DISCUSSION
¶ 15                    I. Interpretation of Section 304(d)(1) of the Tax Act
¶ 16       On appeal, the Department contends it correctly included plaintiff’s pass-through miles
       in the numerator of the apportionment factor as set forth in section 304(d)(1) because pass-
       through miles constitute revenue miles “in this State.” 35 ILCS 5/304(d)(1) (West 2010). We
       review questions of law and statutory construction de novo. Northwest Airlines, 295 Ill. App.
       3d at 892; National City Corp. & Subsidiaries v. Department of Revenue, 366 Ill. App. 3d
       37, 39 (2006). De novo consideration means we perform the same analysis that a trial court
       would perform. Khan v. BDO Seidman, LLP, 408 Ill. App. 3d 564, 578 (2011).
¶ 17       “Tax laws must be strictly construed; they must be given a reasonable construction,
       without bias or prejudice against either the State or the taxpayer, in order to effectuate the
       intent of the legislature.” Northwest Airlines, 295 Ill. App. 3d at 892. Where there is doubt,
       the statute is “ ‘construed most strongly against the government and in favor of the
       taxpayer.’ ” Van’s Material Co. v. Department of Revenue, 131 Ill. 2d 196, 202 (1989)
       (quoting Mahon v. Nudelman, 377 Ill. 331, 335 (1941)).
¶ 18       We begin by looking to the language of the statute, as this is the clearest indicator of the
       legislature’s intent. Northwest Airlines, 295 Ill. App. 3d at 892. “If the language is clear and
       unambiguous, the statute will be construed according to its terms, without resorting to aids
       of construction.” Id. We must give the statutory language “its plain, ordinary, and popularly
       understood meaning.” Alvarez v. Pappas, 229 Ill. 2d 217, 228 (2008).
¶ 19       For taxable years ending before December 31, 2008, the Tax Act requires business
       income derived from furnishing transportation services be apportioned in the following
       manner:
           “Such business income (other than that derived from transportation by pipeline) shall be
           apportioned to this State by multiplying such income by a fraction, the numerator of
           which is the revenue miles of the person in this State, and the denominator of which is
           the revenue miles of the person everywhere. For purposes of this paragraph, a revenue
           mile is the transportation of 1 passenger or 1 net ton of freight the distance of 1 mile for
           a consideration. Where a person is engaged in the transportation of both passengers and
           freight, the fraction above referred to shall be determined by means of an average of the

                                                 -5-
           passenger revenue mile fraction and the freight revenue mile fraction, weighted to reflect
           the person’s
                    (A) relative railway operating income from total passenger and total freight
                service, as reported to the Interstate Commerce Commission, in the case of
                transportation by railroad, and
                    (B) relative gross receipts from passenger and freight transportation, in case of
                transportation other than by railroad.” (Emphasis added.) 35 ILCS 5/304(d)(1) (West
                2010).
¶ 20       This court has twice issued opinions considering the language of section 304(d) as it
       relates to the type of miles it includes. At the time the trial court determined pass-through
       miles cannot be taxed under section 304(d)(1), the only case law construing section 304(d)
       was Northwest Airlines, 295 Ill. App. 3d at 889. In Northwest Airlines, we considered
       whether section 304(d)(1) provided that flyover miles must be included in the numerator of
       the apportionment factor. Id. at 892. There, Northwest Airlines contested the Department’s
       adjustment of the tax owed to include airplane travel miles not involving takeoff or landing,
       that is to say, miles flown over Illinois. Id. at 891. The Department argued flyover miles were
       included in the apportionment factor as they flew in Illinois airspace and this interpretation
       facilitated 100% apportionment of taxes and was not preempted by federal law or a violation
       of the commerce clause. Id. In construing “in this State” the Northwest Airlines court stated:
           “[T]he circuit court initially determined that, had the legislature intended to include
           flyover miles in the apportionment numerator, it would have used the appropriate
           language–‘above’ Illinois, ‘over’ Illinois, or ‘in [Illinois] air space.’ Since the legislature
           sought to include only those revenue miles ‘in’ Illinois, the court concluded that flyover
           miles should be excluded. However, as the Department correctly argues, all the airline
           mileage at issue here is necessarily ‘over’ this state, ‘above’ this state, or ‘in [Illinois] air
           space.’ Thus, it is erroneous to conclude that flyover miles should be excluded simply
           on the basis of an ‘in’ versus ‘over’ analysis.” (Emphasis omitted.) Id. at 892-93.
¶ 21       The Northwest Airlines court went on to consider whether the statute, if interpreted to
       include flyover miles, would be unconstitutional. Id. at 893. It concluded an interpretation
       of section 304(d) which included flyover miles would violate the commerce clause as there
       was a “total absence of any nexus between the overflights and this state.” (Emphasis in
       original.) Id. at 893-94 (citing GTE Automatic Electric, Inc. v. Allphin, 68 Ill. 2d 326, 340
       (1977)). Specifically:
           “[T]he nexus requirement [of the commerce clause of the United States Constitution]
           cannot be satisfied. Flight plans for overflights are not filed with any Illinois state or
           municipal authorities. There are no voice communications with overflights, and such
           flights make no use of Illinois facilities, services, or employees. There exists no physical
           contact between overflights and this state, nor any economic connection. We do not find
           the mere possibility that an overflight will avail itself of services and facilities in this
           state in the event of an unscheduled landing sufficient to establish a nexus.” Id. at 894.
¶ 22       Subsequent to the trial court’s determination, we issued Panhandle Eastern Pipeline Co.
       v. Hamer, 2012 IL App (1st) 113559. In Panhandle, we considered the related issue of

                                                   -6-
       whether section 304(d)(2) included “flow-through” miles of natural gas in the numerator of
       the apportionment factor. Id. ¶ 22. Section 304(d)(2) uses substantially similar language as
       section 304(d)(1) to determine the apportionment factor:
            “Such business derived from transportation by pipeline shall be apportioned to this State
            by multiplying such income by a fraction, the numerator of which is the revenue miles
            of the person in this State, and the denominator of which is the revenue miles of the
            person everywhere. For the purposes of this paragraph, a revenue mile is the
            transportation by pipeline of 1 barrel of oil, 1,000 cubic feet of gas, or of any specified
            quantity of any other substance, the distance of 1 mile for a consideration.” (Emphasis
            added.) 35 ILCS 5/304(d)(2) (West 2010).
       The Department of Revenue argued flow-through gas miles were properly included in the
       numerator of the apportionment factor, whereas Panhandle contended flow-through miles
       were not “in this State” because the gas originated and terminated outside of Illinois.
       Panhandle, 2012 IL App (1st) 113559 ¶ 26. Panhandle further argued “the word ‘in’ does
       not mean ‘through,’ ” an argument which we stated “strains the natural meaning of the statute
       and its legislative purpose.” Id. ¶¶ 30, 31. We concluded “ ‘in’ also relates to a presence or
       existence. Though not confined to Illinois, plaintiffs’ pipelines and the gas are present and
       exist in Illinois, as the flow-through miles transport natural gas by pipeline.” Id. ¶ 30.
¶ 23        The reviewing court also distinguished Northwest Airlines, as the pipeline had a physical
       presence in Illinois whereas the airplanes, when flying over Illinois, made no physical contact
       with the state. Id. ¶ 40. Panhandle conceded it had compressor stations within Illinois,
       employed Illinois residents, and had permanent easements. Id. Due to the physical presence
       of the pipeline itself, plaintiffs’ employees, and business operations in Illinois, we ultimately
       concluded flow-through miles were properly included in the numerator of the apportionment
       factor. Id. ¶ 41.4
¶ 24        At issue here is whether pass-through miles traveled on behalf of an interstate trucking
       company in Illinois without picking up or delivering goods should be included in the
       numerator of the apportionment factor of section 304(d)(1). The Department contends the
       trial court erred in determining section 304(d)(1) of the Tax Act does not allow the
       Department to tax pass-through miles because pass-through miles are revenue miles “in this
       State.” 35 ILCS 5/304(d)(1) (West 2010). The Department argues “in this State” means
       “miles within Illinois’s borders.” Therefore, the miles driven by plaintiff through Illinois
       must be included in the numerator of the apportionment factor.
¶ 25        Plaintiff does not provide this court with a definition of “in this State.” Instead, plaintiff
       asserts “in this State” cannot be interpreted without also examining its relationship to the
       phrase “revenue miles.” Plaintiff maintains the trial court correctly determined section
       304(d)(1) excluded pass-through miles because the plain language of the statute allows
       taxation only of “revenue miles,” which the statute defines as “the transportation of 1
       passenger or 1 net ton of freight the distance of 1 mile for a consideration.” 35 ILCS


               4
                We also analyzed whether the inclusion of flow-through miles violated the commerce clause
       of the United States Constitution and determined it did not. Id. ¶ 55.

                                                  -7-
       5/304(d)(1) (West 2010). Therefore, when a truck passes through Illinois without picking up
       or delivering passengers or freight, there is no consideration exchanged in Illinois and, thus,
       it cannot be taxed on those miles.
¶ 26        Plaintiff attempts to distinguish pass-through miles from the flow-through miles that
       were properly included in the numerator of the apportionment factor in Panhandle. Plaintiff
       asserts flow-through miles are fixed in the land by pipelines and therefore the revenue
       generating activity (transporting gas) is firmly located in Illinois. Plaintiff states, on the other
       hand, pass-through miles are not fixed because plaintiff can decide whether or not to drive
       through Illinois when transporting its customer’s goods.
¶ 27        We conclude plaintiff’s pass-through miles establish a physical and economic presence
       in Illinois which must be taxed according to section 304(d)(1). Plaintiff’s contention, that
       physical presence must be fixed within Illinois in order to be “in this State,” is found
       nowhere in our case law. In fact, this court has previously determined the phrase “in this
       State” is more broadly defined to include, not only being within Illinois borders, but also
       having a presence or existence in Illinois. Panhandle, 2012 IL App (1st) 113559, ¶ 30. This
       broad definition encompasses not only the facts in Panhandle, but also plaintiff whose trucks
       and employees are physically present in the state as they pass-through the boundaries of
       Illinois. Just as the pipeline in Panhandle travels through Illinois, plaintiff’s trucks travel
       through Illinois on its roadways. This is true whether or not plaintiff is picking up or
       delivering goods in Illinois. By utilizing the state’s infrastructure and roadways, plaintiff’s
       property and employees are physically present in Illinois. Plaintiff is also conducting the
       economic activity of providing shipping services involving travel through Illinois. Moreover,
       the record demonstrates plaintiff alleged it paid Illinois fuel tax, which indicates plaintiff
       engaged in additional economic activities with Illinois suppliers. This physical presence,
       along with an economic connection, establishes plaintiff is “in the State.” See Panhandle,
       2012 IL App (1st) 113559, ¶ 40.
¶ 28        Although the plaintiff is “in this State,” plaintiff contends pass-through miles cannot be
       included in numerator of the apportionment factor because they are not miles generating
       revenue in Illinois. Plaintiff asserts the statute defines “revenue miles” as those miles
       traveled “for a consideration”; therefore, if there is no consideration exchanged in Illinois
       those miles cannot be taxed. In other words, for Illinois to collect taxes on miles driven,
       plaintiff must generate income from within Illinois. According to plaintiff, pass-through
       miles do not generate income and, thus, should not be included in the numerator of the
       apportionment factor.
¶ 29        As our supreme court has already determined, “the most fitting construction of section
       304(d) would be to include all income earned from the business of furnishing transportation
       services.” Texaco-Cities Service Pipeline Co., 182 Ill. 2d at 276. The statute does not state,
       as plaintiff suggests, that revenue miles are conditioned on the taxpayer generating income
       from people or entities within Illinois. The statute merely requires the miles be traveled “for
       a consideration.” 35 ILCS 5/304(d)(1) (West 2010). The plain and ordinary meaning of
       “consideration” is “[s]omething (such as an act, a forbearance, or a return promise) bargained
       for and received by a promisor from a promisee; that which motivates a person to do
       something, esp. to engage in a legal act.” Black’s Law Dictionary 347 (9th ed. 2009). When

                                                   -8-
       transporting goods plaintiff receives monetary compensation in exchange for its shipment
       of those goods to a particular destination. In relation to plaintiff’s business, the monetary
       compensation is the consideration. Thus, it follows, as long as plaintiff receives monetary
       compensation for its shipping services, pass-through miles must be included in the numerator
       of the apportionment factor because those miles were traveled in Illinois for a consideration.
¶ 30       Additional support for the inclusion of pass-through miles in section 304(d)(1) comes
       from the purpose of the Tax Act itself. “The purpose of *** article 3 of the Illinois [Income
       Tax] Act is to assure that 100%, and no more or no less, of the business income of a
       corporation doing multistate business is taxed by the States having jurisdiction to tax it.”
       GTE, 68 Ill. 2d at 335. In Panhandle we stated the legislative purpose of section 304(d) was
       to allow “Illinois to collect its share of plaintiffs’ income tax under the apportionment
       factor.” Panhandle, 2012 IL App (1st) 113559, ¶ 32. We determined not including flow-
       through miles would create a gap in taxation and therefore would be contrary to the purpose
       of the statute. See id. The Department similarly maintains the inclusion of pass-through miles
       is necessary to avoid any gaps in taxation. We agree that this interpretation of the statute
       accomplishes the legislative purpose of section 304(d).
¶ 31       Plaintiff further asserts the General Assembly’s addition of section 304(d)(3) indicates
       pass-through miles were not intended to be included by the legislature in the apportionment
       formula of section 304(d)(1).
¶ 32       In 2007, section 304(d) of the Tax Act was amended with the addition of a new
       subsection which adopted a different method for determining the apportionment factor.5
       Specifically, the apportionment calculation would no longer be based on revenue miles, but
       instead on gross receipts. The relevant portion of section 304(d)(3) provides:
           “For taxable years ending on or after December 31, 2008, business income derived from
           providing transportation services other than airline services shall be apportioned to this
           State by using a fraction, (a) the numerator of which shall be (i) all receipts from any
           movement or shipment of people, goods, mail, oil, gas, or any other substance (other than
           by airline) that both originates and terminates in this State, plus (ii) that portion of the
           person’s gross receipts from movements or shipments of people, goods, mail, oil, gas,
           or any other substance (other than by airline) that originates in one state or jurisdiction
           and terminates in another state or jurisdiction, that is determined by the ratio that the
           miles traveled in this State bears to total miles everywhere and (b) the denominator of
           which shall be all revenue derived from the movement or shipment of people, goods,
           mail, oil, gas, or any other substance (other than by airline).” 35 ILCS 5/304(d)(3) (West
           2010).
¶ 33       Plaintiff contends the amendment of section 304(d) to expressly include pass-through
       miles in the apportionment factor demonstrates the General Assembly did not intend for the
       pre-existing version of section 304(d)(1) to include pass-through miles. We considered and
       rejected an identical argument in Panhandle:


              5
               The statute was amended twice, the first amendment being effective August 16, 2007. The
       second and current version was effective January 11, 2008.

                                                 -9-
               “While section 304(d)(3) clearly includes any flow-through miles as part of the
           apportionment factor for tax years 2008 and later, it does not apply to the tax years at
           issue in this case. Section 304(d)(3) sets forth a new calculation of the apportionment
           factor. The apportionment factor no longer uses ‘revenue miles’ as the determining figure
           for the apportionment factor, but instead calculates the apportionment factor based on
           receipts. The legislature’s enactment of a new method for calculating the apportionment
           factor, which expressly includes flow-through miles, does not mean that flow-through
           miles could not have been included in the numerator under section 304(d)(2). Section
           304(d)(3)’s formula for calculating the apportionment factor has no effect on our
           construction of section 304(d)(2). Just because section 304(d)(3) specifically provides
           for the inclusion of flow-through miles, it does not follow that section 304(d)(2)’s
           apportionment factor excluded the miles.” Panhandle, 2012 IL App (1st) 113559, ¶ 36.
       Just as we determined flow-through miles were included in section 304(d)(3) in Panhandle,
       so too do the parties here admit section 304(d)(3) includes pass-through miles in the
       numerator of the apportionment factor. As in Panhandle, section 304(d)(3) does not apply
       to the present case because we are also addressing taxes assessed prior to 2008. As
       previously noted, section 304(d)(2) and section 304(d)(1) use substantially similar language.
       Accordingly, we will follow the conclusion of our colleagues in Panhandle and find the
       addition of section 304(d)(3) does not preclude the inclusion of pass-through miles in section
       304(d)(1). See id.
¶ 34       For these reasons, we conclude pass-through miles are “in this State,” as plaintiff’s trucks
       and employees maintained a physical and economic presence while driving through Illinois.

¶ 35                                   II. Commerce Clause
¶ 36       On appeal plaintiff asks us to consider whether the inclusion of pass-through miles in the
       numerator of the apportionment factor would violate the commerce clause of the United
       States Constitution (U.S. Const., art. I, § 8, cl. 3). As plaintiff informed the trial court in a
       footnote to its motion for summary determination, if the trial court ruled in its favor on the
       issue of whether pass-through miles should be included in the numerator of the
       apportionment factor, then the court need not consider the commerce clause issue.6 The trial
       court, thus, did not address or determine this issue. Although the plaintiff mentioned this
       contention in a paragraph of the complaint, plaintiff failed to allege a commerce clause
       violation as a count. Additionally, neither party set forth any arguments regarding the
       commerce clause violation during the hearing on the motion for summary determination.
       Only on appeal did plaintiff fully address and argue that section 304(d)(1) violates the
       commerce clause. In reply, the Department maintains we do not need to consider this issue,


               6
                This same footnote also stated the issue of whether plaintiff would be assessed tax penalties
       would be moot if the trial court ruled in its favor. This issue was not addressed on appeal. Plaintiff
       further failed to address count V of its complaint regarding the constitutionality of the Tax
       Delinquency Amnesty Act (35 ILCS 735/3-1 et seq. (West 2010)) in the trial court and also on
       appeal.

                                                   -10-
       as the trial court only addressed the statutory interpretation of section 304(d)(1).
¶ 37       “It has frequently been held that the theory upon which a case is tried in the lower court
       cannot be changed on review, and that an issue not presented to or considered by the trial
       court cannot be raised for the first time on review.” Kravis v. Smith Marine, Inc., 60 Ill. 2d
       141, 147 (1975). This rule is applicable to constitutional issues. Forest Preserve District v.
       First National Bank of Franklin Park, 2011 IL 110759, ¶ 27. Because of plaintiff’s failure
       to sufficiently raise the issue in the trial court, this court declines to address it on appeal.

¶ 38                                   CONCLUSION
¶ 39      For the aforementioned reasons, we reverse the determination of the trial court. The
       matter is remanded in accordance with this opinion.

¶ 40      Reversed and remanded.




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