Knowledge Center

Friday, August 07, 2015

HMB's Jordan Goodman Quoted by Bloomberg BNA on the Ongoing Illinois Qui Tam Law Suit Drama

"California Wineries Demand Illinois Halt Abusive Tax Cases"

Tax Management Weekly State Tax Report , August 7, 2015

by Michael Bologna

Three California wine vendors have filed suit against the Illinois Department of Revenue and Office of the Attorney General demanding the agencies halt a pattern of abusive whistle-blower actions involving the payment of use taxes on Internet-based wine sales (Chimney Rock Winery LLC v. Beard, Ill. Cir. Ct., No. 2015-L-050552, complaint filed, 7/28/15).

The wineries, together with the San Francisco-based Wine Institute, filed suit July 28 in Cook County Circuit Court seeking an order enjoining the attorney general and IDOR from authorizing prosecutions under the Illinois False Claims Act (IFCA) in violation of state and federal law.

The plaintiffs further called on the court to order the IDOR to use authorities under Illinois' Taxpayers' Bill of Rights to abate use tax payments that they believe are "coerced" through the whistle-blower or "qui tam" process on tax positions that conflict with the department's own regulations.

"The suit filed by the Wine Institute is a clever and hopefully successful alternative to ridding the Illinois courts of the nuisance qui tam law suits," commented Jordan M. Goodman, a tax partner with Horwood Marcus & Berk in Chicago. "Unfortunately, this suit was born from the frustration of hundreds of litigants trapped by the aggressive positions taken by the relator and the failure of the legislature and the attorney general's office to nip these types of lawsuits in the bud."

...Goodman, who has supported a Multistate Tax Commission effort addressing flaws in state whistle-blower laws, said the court may have to determine whether a "reasonableness test" should be established for sellers seeking to demonstrate that purchasers had the option of taking delivery of the wine at the seller's location.

Goodman said the suit suggests a failure on the part of the state to administer its tax laws in a clear and consistent manner.

"The fact that this suit was even filed is unfortunate," Goodman said. "It shows that the legislative process to correct the use of qui tam acts in Illinois is a failure. It also highlights that the role of the attorney general in such suits in Illinois is misplaced. The decision to pursue these types of questions should be with the Department of Revenue, where they have the expertise and history to deal with these types of frivolous suits."

To read the full article, visit the Bloomberg Law website.

Copyright 2015 By The Bureau of National Affairs, Inc.. Reprinted with permission.

NOTICE: Emailing an attorney shall not and does not create an attorney-client relationship between the attorney and users of this web site or any other party whatsoever. An attorney-client relationship is ONLY established through a written engagement, and only where doing so would comply with all applicable laws and ethical rules.

CONFIDENTIAL INFORMATION: Transmission of information on-line, over email, or through any electronic means can be unstable, unreliable and insecure. You should not send information or facts via e-mail relating to your legal problem or question. If you do not have an existing attorney-client relationship, your e-mail may not be privileged or confidential.

By clicking 'OK' below, you are agreeing to the terms of this web site.

Please fill out the form below and we'll send an email out about this page to a recipient of your choice.

Copy: Check here if you would like a copy of the email.