Residents in Vermilion file class-action lawsuit against city, finance director, RITA

The class action lawsuit filed by three Vermilion residents against the city, Finance Director Amy Hendricks, and the Regional Income Tax Agency (RITA) aims to recover income taxes collected between 2018 and 2022. Attorney Gerald Phillips is representing Thomas and Corrie Ostrowski, and Roy B. Anderson in this legal action seeking more than $25,000 in restitution and punitive damages for the unjust collection of city income taxes.

The lawsuit, filed on April 15, addresses a Resident Income Tax Credit ordinance implemented by Vermilion City Council in 2018 at a 1 percent rate. This credit was later reduced to one-half percent in 2022. However, Ordinance No. 2025-12, passed on April 7, reinstated the full 1 percent credit for tax years between 2018 and 2022.

Residents of Vermilion who worked outside the city were initially entitled to a 1 percent Resident Income Tax Return on their tax filings, with the condition that the employment income tax rate of the external cities was 1 percent or higher. Despite this, residents received only half of the expected amount, leading to the dispute over the unjust tax collection.

Attorney Phillips expressed his dissatisfaction with the situation, stating that Vermilion Mayor Jim Forthofer and City Council were aware of this discrepancy since June 2022 but failed to take any action. Hendricks and RITA officials were unavailable for comment on the matter.

The legal action pursued by the residents confronts the issue of residents working outside Vermilion having their taxes collected unjustly by the city. Phillips emphasized that the costs associated with individual legal actions for each affected resident far exceed the potential recovery amount, underscoring the necessity of a class action lawsuit in this case.

The reinstatement of the full 1 percent Resident Income Tax Credit for the specified tax years is a step towards rectifying the unjust collection and withholding of taxes from residents who worked outside Vermilion. The class action lawsuit aims to ensure that affected residents receive the restitution they are owed and to hold accountable the entities responsible for the improper collection of income taxes.