Knowledge Center

Wednesday, June 11, 2014

HMB's Marilyn Wethekam Quoted in Tax Analysts Qui Tam Article

"Abuse of Qui Tam Actions Puts Tax Departments and Practitioners on the Same Side"

Excerpt from Tax Notes/State Tax Today, Wednesday, June 11, 2014

Applying state false claims acts to tax is a trend so potentially destructive that even tax professionals who are traditional foes are united against it, Illinois's top revenue official and one of the state's leading practitioners said June 9 at the Federation of Tax Administrators annual meeting in St. Petersburg, Florida.

Brian Hamer, the Illinois revenue director, said he enjoyed being part of a two-person panel on the issue with Marilyn Wethekam, partner at Horwood Marcus & Berk Chartered, because "every minute that she's here, she's not suing me."

Wethekam, who appeared with Hamer at the Federation of Tax Administrators annual meeting in St. Petersburg, Florida, said that she guarantees she and Hamer will agree, "which is a first," she added.

The tax professionals said Illinois in particular has been plagued by a wave of qui tam actions that appear to be far more about making money for the relator, or whistleblower, than for getting at the correct amount of tax. The cases, which they agree have little to no merit, have become so numerous that they are creating a strain on both the tax department and the practitioners that have to try to defend them, both Hamer and Wethekam said.

"This should scare you," Wethekam said. "This is in some way usurping all your ability to administer state taxes."

Hamer and Wethekam outlined several harmful effects of applying state false claims acts to tax, including:

  • removal of tax administration decisions from taxing authorities;
  • the risk of disparate treatment among taxpayers, depending on the time and resources needed to deal with each case;
  • conflict with established procedures designed to ensure efficient resolution of tax disputes;
  • erosion of protection for taxpayer rights, including the right to privacy in tax matters;
  • possible discouragement of participation in voluntary disclosure programs; and
  • incentivizing the collection of transaction taxes, which may expose taxpayers to class action consumer fraud lawsuits.

To read more, please visit the Tax Analysts website.

Copyright 2014 Tax Analysts. Reprinted with permission.

 

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