Tuesday, August 04, 2015
HMB's Marilyn Wethekam Quoted in Bloomberg BNA Daily Tax Notes
on NYC's False Claims Act Powers in State Tax Case
"New York Court in 'Sprint Nextel' to Weigh State's False
Claims Act Powers in Tax Case"
New York's highest court will hear
arguments in a potentially landmark case on the scope of the
state's power to pursue False Claims Act claims in
Arguments before the New York Court of Appeals
are scheduled for Sept. 9. The case of first impression alleges
Sprint Nextel Corp. knowingly and deliberately failed to collect
and pay sales tax on its flat-rate calling plans, in an attempt to
gain a competitive edge over its rivals (People v. Sprint
Nextel Corp., N.Y., No. APL-2014-00152).
The company could be liable for some $400 million in back taxes
and treble damages, if the court rules in favor of the state.
The case has drawn the attention of companies and tax
practitioners because it is the first tax enforcement action filed
under the state False Claims Act, which was amended in 2010 to
cover tax cases. Tax experts told Bloomberg BNA that the case could
have implications for other states...
A. Wethekam, a partner at the Chicago law firm Horwood Marcus &
Berk Chartered, said ''state tax disputes should not
be adjudicated under a False Claims Act.''
''In the area of state tax, statutory interpretation is key,
particularly when you are dealing with complicated issues or
transactions where there is little or no guidance,'' she told
Bloomberg BNA in an e-mail.
''It is extremely difficult in those situations to substantiate
the argument that, because a taxpayer interpreted a statute in a
manner with which the taxing authority may disagree, such an
interpretation rises to the level of knowingly making a false
claim,'' she said....
Copyright 2015 By The Bureau of
National Affairs, Inc.. Reprinted with permission.