Agency sues American Airlines over tax incentives

CHICAGO (AP) — The agency that oversees public transportation in Chicago has filed a lawsuit claiming American Airlines is running a "sham" office in a small town to avoid paying taxes in the nation's third-largest city.

The Regional Transportation Authority filed its lawsuit late Tuesday afternoon. It claims American is actually doing the work of buying millions of dollars in jet fuel in Chicago, not in the small community of Sycamore.

The agency says the setup cost Chicago, Cook County and the RTA $23.6 million in lost sales taxes in 2013 alone and far more than that since the office opened in 2004.

Sycamore's city manager and American declined to comment. But when the RTA filed a similar lawsuit against United Airlines last year, American said it was following the law.

©2014 by The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.