Judge strikes down Chicago anti-litter tax,
and Californians have increased tax privacy
By Kay Bell • Bankrate.com

Because the federal income tax is the biggest and usually the first tax we see listed on our pay stubs, we naturally tend to focus on it.

But state government takes a bite out of our spending money, too. Bankrate.com will help you stay on top of what your localities are collecting -- income, sales, personal property or investment taxes, or often a combination of all.

Here's a look at some recent tax actions across the nation.

Chicago take-out food fans can't be taxed more
CHICAGO -- Thanks to a state court judge's ruling, Windy City fast food patrons will find their meals costing a little less.

The judge found the city's anti-litter tax on carryout food items violated the state constitution's uniformity clause. The Cook County Circuit Court judge noted that while the law's intention to reduce trash was good, the measure was not applied "in a uniform and rational manner."

Two Chicago restaurateurs, supported by the Illinois Restaurant Association, filed the suit challenging the ordinance after it was enacted in March. The judge agreed with their arguments that the law was not evenly enforced. For example, carryout food sold by establishments that had no on-premises seating was exempt from taxation. The judge called this particular exemption a "glaring shortcoming" because "such businesses are the most likely to contribute to the litter problems that the ordinance is allegedly attempting to ameliorate."

The city had enacted the half-percent sales tax, which supporters hoped would bring in about $5 million a year, to fund a new trash collection project. A city representative said Chicago lawmakers are considering both an appeal of the ruling and a rewrite of the ordinance.

California taxpayers get more privacy protections
SACRAMENTO -- Taxpayer conversations with tax preparers are now more protected in California.

Gov. Gray Davis has signed legislation smoothing out a kink in state law that deemed communications between taxpayers and preparers confidential under federal law but not private under state statutes. That meant that tax information disclosed under state law could be obtained by the Internal Revenue Service, circumventing federal privacy regulations.

The new law extends attorney-client privilege to more state tax information exchanged between taxpayers and federally authorized tax practitioners, even if the practitioner is not an attorney. The privacy guarantee will not apply to criminal matters or written material promoting tax shelters.

The bill was endorsed by the California Society of Certified Public Accountants and the California Society of Enrolled Agents. It will expire Jan. 1, 2005, unless legislation is enacted to extend it or make it permanent.

-- Posted Sept. 28, 2000