Knowledge Center

Monday, April 06, 2015

HMB's Jordan Goodman Quoted by Tax Analysts on Recent Appellate Court Dismissal of Another Use Tax Collection Qui Tam Suit

April 3, 2015

"Illinois Court of Appeals Dismisses Another Use Tax CollectionQui TamSuit"

By Eric Yauch

An Illinois appeals court on March 31 upheld a ruling that dismissed a whistleblower's suit involving allegations that a company failed to collect use taxes on shipping and handling charges.

In State of Illinois ex rel. Schad Diamond and Shedden v. QVC Inc., Stephen Diamond of Schad Diamond and Shedden filed a suit against QVC Inc. in the Circuit Court of Cook County. The suit alleged that QVC falsely claimed that it had collected use taxes and remitted them to the state for out-of-state purchases.

However, two weeks after Diamond filed the complaint, QVC began collecting and remitting use taxes on shipping and handling charges. Diamond filed discovery motions seeking all communications that took place between QVC and the state after the complaint was filed to determine if a settlement was reached.

The court limited Diamond's discovery to Thomas Pileggi, QVC's director of state taxes, who said in an affidavit that QVC and the state didn't enter into a settlement agreement.

In April 2013, Diamond filed for an award of the share of use tax amounts paid by QVC to the state, claiming that the award was allowed under section 4 of the Illinois False Claims Act.

The state was granted leave to intervene and filed a motion to dismiss the case, which the circuit court granted...

The Appellate Court of Illinois, First District, held that the case was properly dismissed...

The court also held that because the case was dismissed, Diamond wasn't entitled to any proceeds under the Illinois False Claims Act.

Jordan Goodman of Horwood Marcus & Berk said these taxpayer qui tam actions frustrate the state. "I think it's one of those [situations] where the Department of Revenue, and the practitioners, and the taxpayers, and even people in the executive branch, are frustrated by these cases."

The full article is available on the Tax Analysts website.

Copyright 2015 Tax Analysts. Reprinted with permission.

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