Ally Financial Trims Chicago Tax Bill on Car Leases on Appeal

Ally Financial Inc. convinced an Illinois appeals court Thursday to reduce a $2.36 million tax bill that Chicago imposed on 2,700 car leases it financed for dealerships.

Chicago assessed $2.15 million in lease transaction tax, including interest and penalties, and $214,000 in titled personal property use tax, including interest and penalties, on Ally for 2009-2015. The Illinois Appellate Court, First District, agreed with the city that Ally—not the dealership—is responsible for collecting the taxes from customers, upholding most of the assessments.

But the city had no authority to prorate lease taxes on down payments for cars that were originally registered ...