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Tobacco shop, wholesaler sue county over new tax

The former owner of Belicoso Cigar Lounge is in federal prison after pleading guilty to tax evasion and the Village of Orland Park is attemping to close the business. | Larry Ruehl~Sun-Times Media

A Chicago tobacco shop as well as a local wholesaler are trying to stamp out a new Cook County tax on cigars, snuff and loose tobacco, saying the tax language on the books is so “unconstitutionally vague” that “you’d have to hire a fortune teller” to determine its meaning.

Arangold Corp., a tobacco wholesaler in suburban Northbrook, and Loop-based retailer Iwan Ries Co. recently filed a lawsuit in Cook County Circuit Court asking a judge to halt the tax, which kicks in March 1.

The new tax – an expansion of the cigarette tax – was approved by the Cook County Board as part of the larger 2012 budget and was expected to bring in $9.6 million this year for the cash-strapped government.

The lawsuit filed against Cook County and Revenue Director Zahra Ali calls the tax unconstitutional for a number of reasons, according to legal papers filed in circuit court, including when the tax is imposed. The attorney for the company questions whether the tax is imposed when the wholesaler receives a shipment or at the time it’s sold to the consumer.

“It’s so vague and indefinite, no one knows how it works. You’d have to hire a fortune teller,” said Stanley Kaminski, the Chicago attorney representing the companies. “We can’t have people guessing at how to pay the tax, especially if they’re going to face a penalty. So we’re asking a judge to stop enforcement of the tax and if a court does find the tax is illegal to stop enforcement until which [time] the county makes it legal.”

The tax also violates the Illinois and U.S. constitutions because it’s imposed on tobacco sold and shipped across state and U.S. borders, Kaminski said.

Owen Kilmer, a spokesman for Cook County Board President Toni Preckwinkle, said the office hadn’t seen a copy of the lawsuit.

“We believe the ordinance as written is able to withstand a legal challenge,” Kilmer said. “We worked closely with tobacco industry associations, as well as individual distributors and manufacturers, after we introduced our budget and throughout the implementation process.”