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
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
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
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
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.
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.