Unjust Enrichment Through the Refund of Illegal Taxes In Illinois
In Illinois, there is a policy against unjust enrichment through the refund of illegal taxes. Consolidated Distilled Products, Inc. v. Mahin, 56 Ill. 2d 110, 116, 306 N.E.2d 465 (1973); Benzoline Motor Fuel Co. v. Bollinger, 353 Ill. 600, 610-11, 187 N.E. 657 (1933).
The pass-on defense forecloses a taxpayer's entitlement to a tax refund, unless the taxpayer shows that it bore the burden of the tax and did not pass it on to another party. See Milwaukee Safeguard Insurance Co. v. Selcke, 324 Ill. App. 3d 344, 351, 754 N.E.2d 349, 257 Ill. Dec. 691 (2001).
The pass-on defense maybe raised as an affirmative defense or during the remedial phase of litigation. Milwaukee Safeguard Insurance, 324 Ill. App. 3d at 353.
A party challenging a taxpayer's entitlement to a refund bears the burden of raising the pass-on defense. Milwaukee Safeguard Insurance, 324 Ill. App. 3d at 353.
Once the defense is raised, it becomes the taxpayer's burden to show that it did not pass on the tax to another party. Milwaukee Safeguard Insurance, 324 Ill. App. 3d at 353.
Although an impact fee is not a tax, the similarities between both types of payments are sufficient to render instructive certain tax cases. Sundance Homes, Inc. v. County of Du Page, 195 Ill. 2d 257, 266, 746 N.E.2d 254, 253 Ill. Dec. 806 (2001).
The single factor that determines entitlement to a refund is whether the person or entity seeking it "'bore the burden of the tax and not whether the person or entity bore it as a "separate identified charge" or as a so-called "hidden charge."'" Consolidated Distilled Products, Inc., 56 Ill. 2d at 116, quoting Fiorito v. Jones, 45 Ill. 2d 15, 17, 256 N.E.2d 833 (1970).