Powerpoint from the 16th Annual Illinois State and Local Tax Conference held Sept. 17, 2015. The presentation, given by Levenfeld Pearlstein, LLC Partner David Blum and Adam Beckerink of Reed Smith LLP, was titled "Audited Through the Courts: The Troubling Trend in False Claims Act, Class Action , and Municipal Litigation"
Whistleblower and Class Action Lawsuits in Sales Tax: Dammed if You Do, Damne...Levenfeld Pearlstein, LLC
This presentation will discuss recent cases including decisions/settlements that have never been reported as well as best practices/strategies to minimize an area in which even the most conscientious of taxpayers are at risk.
This document discusses different types of business taxes including income tax, sales tax, and property tax. It provides details on how each tax works, how the revenue is used by different levels of government, and how taxes can influence business and consumer behavior. The three main reasons for taxes are to raise revenue, compensate for public services, and regulate business activity. Taxes can be proportional, progressive, or regressive depending on whether the tax rate stays the same or changes based on income or purchase amount. Business decisions around accounting practices, locations, and relocations are heavily impacted by existing tax rates and structures.
This document discusses tax evasion in the Philippines. It defines tax evasion as the criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country. Finally, it discusses what counts as tax evasion and common types of tax evasion such as tax fraud, abusive tax schemes, and employment tax fraud.
Tax avoidance means neglecting to pay taxes that are owed. It is commonly practiced by multinational companies using tax havens to hide profits. While some tax avoidance has existed since the 1920s, it has grown significantly in recent decades, costing governments $50-200 billion in lost revenue annually. Poor countries have struggled to raise sufficient tax revenue due to tax competition between governments and trade liberalization policies that shift more of the tax burden onto poor individuals through consumption taxes. Tax havens undermine market competition and capital investment by allowing wealthy individuals and companies to escape taxation, and enable political corruption through secret bank accounts.
Ron shared with us his thought on the origins of taxation, the enlightenment thinkers on taxaxtion and as a CPA, the alternatives to the current tax system in the United States.
Ron acknowledged that many insights he shared were found in Charles Adams great book, For Good and Evil: The Impact of Taxes on the Course of Civilization.
Tax evasion consists of illegal and intentional actions taken by individuals to reduce their legally due tax obligations. The difficulty of identifying this willful tax noncompliance behavior is reflected in the varying terms to which the analyses refer, such as "evasion", "noncompliance," "misreporting," and "tax gap".
Today's political environment has confused many Americans about the income tax system. Understand what our tax system is designed to do and what are some of the alternatives that have been proposed.
There are two videos in PPT, where are black slides:
Video1: https://www.youtube.com/watch?v=wxW8GP59Sq8
Video 2: https://www.youtube.com/watch?v=VcZF_DxQ5cU
Whistleblower and Class Action Lawsuits in Sales Tax: Dammed if You Do, Damne...Levenfeld Pearlstein, LLC
This presentation will discuss recent cases including decisions/settlements that have never been reported as well as best practices/strategies to minimize an area in which even the most conscientious of taxpayers are at risk.
This document discusses different types of business taxes including income tax, sales tax, and property tax. It provides details on how each tax works, how the revenue is used by different levels of government, and how taxes can influence business and consumer behavior. The three main reasons for taxes are to raise revenue, compensate for public services, and regulate business activity. Taxes can be proportional, progressive, or regressive depending on whether the tax rate stays the same or changes based on income or purchase amount. Business decisions around accounting practices, locations, and relocations are heavily impacted by existing tax rates and structures.
This document discusses tax evasion in the Philippines. It defines tax evasion as the criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country. Finally, it discusses what counts as tax evasion and common types of tax evasion such as tax fraud, abusive tax schemes, and employment tax fraud.
Tax avoidance means neglecting to pay taxes that are owed. It is commonly practiced by multinational companies using tax havens to hide profits. While some tax avoidance has existed since the 1920s, it has grown significantly in recent decades, costing governments $50-200 billion in lost revenue annually. Poor countries have struggled to raise sufficient tax revenue due to tax competition between governments and trade liberalization policies that shift more of the tax burden onto poor individuals through consumption taxes. Tax havens undermine market competition and capital investment by allowing wealthy individuals and companies to escape taxation, and enable political corruption through secret bank accounts.
Ron shared with us his thought on the origins of taxation, the enlightenment thinkers on taxaxtion and as a CPA, the alternatives to the current tax system in the United States.
Ron acknowledged that many insights he shared were found in Charles Adams great book, For Good and Evil: The Impact of Taxes on the Course of Civilization.
Tax evasion consists of illegal and intentional actions taken by individuals to reduce their legally due tax obligations. The difficulty of identifying this willful tax noncompliance behavior is reflected in the varying terms to which the analyses refer, such as "evasion", "noncompliance," "misreporting," and "tax gap".
Today's political environment has confused many Americans about the income tax system. Understand what our tax system is designed to do and what are some of the alternatives that have been proposed.
There are two videos in PPT, where are black slides:
Video1: https://www.youtube.com/watch?v=wxW8GP59Sq8
Video 2: https://www.youtube.com/watch?v=VcZF_DxQ5cU
This document discusses high-velocity enforcement of the Foreign Corrupt Practices Act (FCPA) by the Department of Justice and Securities and Exchange Commission from 2002 to 2010. It notes increasing penalties imposed on corporations during this period and analyzes current enforcement trends, including more prosecutions of foreign companies and increased coordination with Latin American countries. The document also examines elements of the FCPA offense, exceptions, and outlines best practices for designing an effective anti-corruption compliance program.
India loses over $314 billion annually to tax evasion, including $314 billion from uncollected income taxes and $800 billion from corporate tax incentives. Tax evasion occurs through weak enforcement systems, corruption, complex laws, and methods like overstating expenses and underreporting income. While some large companies and trusts have been caught evading taxes, overall tax evasion remains a major problem as only about 36 million of India's 1.3 billion people pay income taxes. Efforts to curb evasion through new laws and whistleblower rewards have had limited success.
Tax fraud occurs when an individual or entity underreports income or overstates deductions on a tax return to reduce the amount of taxes owed. In India, major areas of tax fraud include falsification of invoices, unreported income, and bribery of tax officials. The Indian government estimates an annual loss of 14 trillion rupees from tax evasion. Recent government efforts to curb fraud include new laws targeting undisclosed foreign assets, a proposed nationwide goods and services tax, and increased use of technology in tax administration. However, tax fraud remains a significant problem in India due to complex tax laws, weak enforcement, and corruption. Simplification of the tax system and improved monitoring are needed to further reduce the prevalence of tax evasion.
This document defines and compares tax evasion and tax avoidance. Tax evasion is illegal and involves intentionally avoiding taxes by not reporting all income or hiding funds. Tax avoidance uses legal tax deductions and loopholes to reduce tax liability. Causes of tax evasion include weak enforcement, corruption, complex laws, and high tax rates. Common evasion practices are under-reporting income, bribery, and lobbying governments. Tax avoidance uses legal deductions and planning to postpone or lower taxes owed. India loses $314 billion annually to tax evasion, which deprives the country of funds for infrastructure and reduces economic growth.
Tax avoidance is legal minimization of taxes through approved means like RRSP contributions or incorporating a business. Tax evasion is illegal non-reporting of income. People engage in both up to the point where marginal benefits equal marginal costs, taking advantage of techniques like postponing taxes, arbitraging across income streams and individuals. While avoidance diverts resources, evasion undermines the tax system and fairness. Higher taxes and penalties reduce evasion, while audits are also deterrent but costly.
This document discusses the implications of the Kerckhaert-Morres case in the EU regarding double taxation and the lack of an internal consistency test. It also examines the US Supreme Court case Wynne v. Maryland, which established an internal consistency clause to prevent discriminatory tax schemes under the Commerce Clause. The document considers whether the EU should adopt a similar internal consistency test through legislative amendment or providing for a type of "Commerce Clause." Adopting such a test could help address issues of double taxation across EU member states.
TAX AVOIDANCE AND TAX EVASION -DIFFERENCE AND EFFECT ON INDIAN ECONOMY Sundar B N
Tax avoidance is the legal minimization of tax liability by taking advantage of loopholes and ambiguities in tax laws, while tax evasion is the illegal non-payment or underpayment of taxes by hiding income or making false claims. While tax avoidance is legal, tax evasion is a criminal offense. Tax evasion reduces government revenue and increases inflation, impacting India's economic growth and development. It also increases corruption and wealth inequality between rich and poor.
Solution to small business financing growthJune Klein
This document proposes allowing small businesses to sell newly acquired depreciation deductions to generate cash flow and stimulate job creation. It outlines a plan where Congress would enact legislation permitting small businesses to sell depreciation deductions for equipment purchases to large companies. This would not impact the deficit, as the deductions are already accounted for. A clearinghouse would facilitate buyers and sellers determining market prices. The cash obtained could help small businesses purchase equipment and hire, improving the economy without government subsidies.
State and Local Tax Nexus Issues and the Impact on Mergers and AcquisitionsSkoda Minotti
The document discusses state and local tax nexus issues and their impact on mergers and acquisitions. It covers state income tax nexus standards such as physical presence and economic nexus thresholds. It also summarizes the Supreme Court's Wayfair decision that overturned the physical presence standard for sales tax nexus and allowed states to implement economic nexus standards. The document stresses the importance of conducting thorough due diligence on state tax issues during M&A transactions to identify potential liabilities.
This document discusses different types of taxes. It describes direct taxes that individuals pay directly to the government, like income tax, versus indirect taxes that can be passed on to consumers. It also explains progressive taxes where high earners pay a greater percentage, regressive taxes where low earners pay a greater percentage, and proportional/flat taxes where all pay the same percentage. The document then provides details on specific taxes like property tax, sales tax, value-added tax, excise taxes on certain goods, and business/corporate taxes.
Will My Heirs Be Forced to Pay an Inheritance Tax in CaliforniaRoy W. Litherland
The document discusses inheritance and estate taxes in California. It notes that in California, there is no inheritance tax and no state-level estate tax. Californians do have to pay the federal estate tax if the value of their estate exceeds $5.43 million, which is the current federal estate tax exclusion amount. The document provides details on the differences between inheritance tax and estate tax, as well as outlining various estate planning strategies that can help mitigate federal estate tax exposure.
This document discusses tax evasion and avoidance. It defines tax as a financial charge imposed by governments to fund public expenditures. Direct taxes are levied on personal income, while indirect taxes are levied on goods and services. Tax evasion is illegally not paying taxes when they are due, while tax avoidance uses legal loopholes to reduce taxes owed. Common methods of evasion include failing to pay taxes, smuggling, and falsifying financial statements. Tax evasion harms economies by reducing government revenues. To reduce evasion, governments can simplify tax laws, increase awareness, and strengthen penalties for noncompliance.
David Stewart Tax Evasion: What is tax evasion? What are tax evasion penalties? What are some celebrities who have been charged with tax evasion? Take a look!
The document defines tax evasion as illegally avoiding paying true tax liability through intentional omissions or falsifications. Those caught face criminal charges and penalties. Tax avoidance refers to legally reducing taxes owed by taking advantage of deductions, credits, and loopholes within tax laws. While tax avoidance is legal, tax evasion is never legal and carries criminal consequences if caught. The document provides examples of common tax evasion and avoidance practices and clarifies the key difference that tax avoidance operates within legal tax frameworks, whereas tax evasion does not.
Tax is a crucial revenue stream for administrations across the world.
While many agencies have already established processes for compliance and enforcement, a combination of avoidance and error is still costing governments billions.
Detection and Prevention measures provide the key to tackling these challenges
The document discusses tax evasion in the Philippines. It defines tax evasion as a criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country such as those against Dunkin Donuts, Rappler, former Supreme Court Chief Justice Renato Corona, and boxer Manny Pacquiao.
The document discusses the implications of two court cases - Kerckhaert-Morres (2004) and Wynne v. Maryland (2015) - on policies regarding double taxation in the EU and US. Specifically, it examines whether the EU should adopt an "internal consistency test" like in the US to determine if parallel taxation schemes discriminate against interstate commerce. The Wynne case found that Maryland's tax system was internally inconsistent and operated as a tariff. Adopting such a test in the EU could help address concerns over double taxation between member states through legislative means. However, the ECJ and others have also looked to non-discrimination and OECD principles to resolve disputes over states' taxing rights.
Original air date: Feb. 9, 2017
Rebroadcast and recording information at http://www.mhmcpa.com
Administrative, legislative and judicial updates emerge from Washington each quarter that may affect your business. Our free, quarterly webinars provide insight to help prepare you for the tax developments of the most interest to you, your business and other interested stakeholders.
Our Eye on Washington webinars assist CEOs, CFOs, financial executives and advisors, and other interested parties in navigating the complex tax environment. From federal tax reform to IRS guidance and healthcare reform, topics covered will provide the up-to-date information you need to help you plan for the future.
The document discusses various topics related to financial crime investigations including legal underpinnings of different legal systems, public versus private investigations, investigative tools and techniques, intelligence versus evidence, investigating across borders, tips and whistleblowers, investigating employees, court orders, beneficial owners, corporate registries, types of financial institution records, and summarizing financial records. Key lessons focused on understanding the different rules that apply to investigations depending on the jurisdiction and recognizing the importance of following the money trail using financial records.
Business Law Training | State and Local Taxes: Key Developments That Will Aff...Quarles & Brady
State and local tax laws are constantly changing in ways that will affect businesses, with over 1,000 changes each year across the 50 states and 97,000 local governments. Proposed federal tax reform could also impact state tax liabilities by changing what items are taxable. States are increasingly aggressive in areas like economic nexus laws, digital goods taxes, and unclaimed property audits to generate more tax revenue.
This document discusses high-velocity enforcement of the Foreign Corrupt Practices Act (FCPA) by the Department of Justice and Securities and Exchange Commission from 2002 to 2010. It notes increasing penalties imposed on corporations during this period and analyzes current enforcement trends, including more prosecutions of foreign companies and increased coordination with Latin American countries. The document also examines elements of the FCPA offense, exceptions, and outlines best practices for designing an effective anti-corruption compliance program.
India loses over $314 billion annually to tax evasion, including $314 billion from uncollected income taxes and $800 billion from corporate tax incentives. Tax evasion occurs through weak enforcement systems, corruption, complex laws, and methods like overstating expenses and underreporting income. While some large companies and trusts have been caught evading taxes, overall tax evasion remains a major problem as only about 36 million of India's 1.3 billion people pay income taxes. Efforts to curb evasion through new laws and whistleblower rewards have had limited success.
Tax fraud occurs when an individual or entity underreports income or overstates deductions on a tax return to reduce the amount of taxes owed. In India, major areas of tax fraud include falsification of invoices, unreported income, and bribery of tax officials. The Indian government estimates an annual loss of 14 trillion rupees from tax evasion. Recent government efforts to curb fraud include new laws targeting undisclosed foreign assets, a proposed nationwide goods and services tax, and increased use of technology in tax administration. However, tax fraud remains a significant problem in India due to complex tax laws, weak enforcement, and corruption. Simplification of the tax system and improved monitoring are needed to further reduce the prevalence of tax evasion.
This document defines and compares tax evasion and tax avoidance. Tax evasion is illegal and involves intentionally avoiding taxes by not reporting all income or hiding funds. Tax avoidance uses legal tax deductions and loopholes to reduce tax liability. Causes of tax evasion include weak enforcement, corruption, complex laws, and high tax rates. Common evasion practices are under-reporting income, bribery, and lobbying governments. Tax avoidance uses legal deductions and planning to postpone or lower taxes owed. India loses $314 billion annually to tax evasion, which deprives the country of funds for infrastructure and reduces economic growth.
Tax avoidance is legal minimization of taxes through approved means like RRSP contributions or incorporating a business. Tax evasion is illegal non-reporting of income. People engage in both up to the point where marginal benefits equal marginal costs, taking advantage of techniques like postponing taxes, arbitraging across income streams and individuals. While avoidance diverts resources, evasion undermines the tax system and fairness. Higher taxes and penalties reduce evasion, while audits are also deterrent but costly.
This document discusses the implications of the Kerckhaert-Morres case in the EU regarding double taxation and the lack of an internal consistency test. It also examines the US Supreme Court case Wynne v. Maryland, which established an internal consistency clause to prevent discriminatory tax schemes under the Commerce Clause. The document considers whether the EU should adopt a similar internal consistency test through legislative amendment or providing for a type of "Commerce Clause." Adopting such a test could help address issues of double taxation across EU member states.
TAX AVOIDANCE AND TAX EVASION -DIFFERENCE AND EFFECT ON INDIAN ECONOMY Sundar B N
Tax avoidance is the legal minimization of tax liability by taking advantage of loopholes and ambiguities in tax laws, while tax evasion is the illegal non-payment or underpayment of taxes by hiding income or making false claims. While tax avoidance is legal, tax evasion is a criminal offense. Tax evasion reduces government revenue and increases inflation, impacting India's economic growth and development. It also increases corruption and wealth inequality between rich and poor.
Solution to small business financing growthJune Klein
This document proposes allowing small businesses to sell newly acquired depreciation deductions to generate cash flow and stimulate job creation. It outlines a plan where Congress would enact legislation permitting small businesses to sell depreciation deductions for equipment purchases to large companies. This would not impact the deficit, as the deductions are already accounted for. A clearinghouse would facilitate buyers and sellers determining market prices. The cash obtained could help small businesses purchase equipment and hire, improving the economy without government subsidies.
State and Local Tax Nexus Issues and the Impact on Mergers and AcquisitionsSkoda Minotti
The document discusses state and local tax nexus issues and their impact on mergers and acquisitions. It covers state income tax nexus standards such as physical presence and economic nexus thresholds. It also summarizes the Supreme Court's Wayfair decision that overturned the physical presence standard for sales tax nexus and allowed states to implement economic nexus standards. The document stresses the importance of conducting thorough due diligence on state tax issues during M&A transactions to identify potential liabilities.
This document discusses different types of taxes. It describes direct taxes that individuals pay directly to the government, like income tax, versus indirect taxes that can be passed on to consumers. It also explains progressive taxes where high earners pay a greater percentage, regressive taxes where low earners pay a greater percentage, and proportional/flat taxes where all pay the same percentage. The document then provides details on specific taxes like property tax, sales tax, value-added tax, excise taxes on certain goods, and business/corporate taxes.
Will My Heirs Be Forced to Pay an Inheritance Tax in CaliforniaRoy W. Litherland
The document discusses inheritance and estate taxes in California. It notes that in California, there is no inheritance tax and no state-level estate tax. Californians do have to pay the federal estate tax if the value of their estate exceeds $5.43 million, which is the current federal estate tax exclusion amount. The document provides details on the differences between inheritance tax and estate tax, as well as outlining various estate planning strategies that can help mitigate federal estate tax exposure.
This document discusses tax evasion and avoidance. It defines tax as a financial charge imposed by governments to fund public expenditures. Direct taxes are levied on personal income, while indirect taxes are levied on goods and services. Tax evasion is illegally not paying taxes when they are due, while tax avoidance uses legal loopholes to reduce taxes owed. Common methods of evasion include failing to pay taxes, smuggling, and falsifying financial statements. Tax evasion harms economies by reducing government revenues. To reduce evasion, governments can simplify tax laws, increase awareness, and strengthen penalties for noncompliance.
David Stewart Tax Evasion: What is tax evasion? What are tax evasion penalties? What are some celebrities who have been charged with tax evasion? Take a look!
The document defines tax evasion as illegally avoiding paying true tax liability through intentional omissions or falsifications. Those caught face criminal charges and penalties. Tax avoidance refers to legally reducing taxes owed by taking advantage of deductions, credits, and loopholes within tax laws. While tax avoidance is legal, tax evasion is never legal and carries criminal consequences if caught. The document provides examples of common tax evasion and avoidance practices and clarifies the key difference that tax avoidance operates within legal tax frameworks, whereas tax evasion does not.
Tax is a crucial revenue stream for administrations across the world.
While many agencies have already established processes for compliance and enforcement, a combination of avoidance and error is still costing governments billions.
Detection and Prevention measures provide the key to tackling these challenges
The document discusses tax evasion in the Philippines. It defines tax evasion as a criminal act of deliberately failing to pay tax liability. People who commit tax evasion face criminal charges and penalties such as jail time and fines. The document then discusses various tax revenues in the Philippines including income tax, excise tax, franchise taxes, and import duties. It provides examples of high-profile tax evasion cases in the country such as those against Dunkin Donuts, Rappler, former Supreme Court Chief Justice Renato Corona, and boxer Manny Pacquiao.
The document discusses the implications of two court cases - Kerckhaert-Morres (2004) and Wynne v. Maryland (2015) - on policies regarding double taxation in the EU and US. Specifically, it examines whether the EU should adopt an "internal consistency test" like in the US to determine if parallel taxation schemes discriminate against interstate commerce. The Wynne case found that Maryland's tax system was internally inconsistent and operated as a tariff. Adopting such a test in the EU could help address concerns over double taxation between member states through legislative means. However, the ECJ and others have also looked to non-discrimination and OECD principles to resolve disputes over states' taxing rights.
Original air date: Feb. 9, 2017
Rebroadcast and recording information at http://www.mhmcpa.com
Administrative, legislative and judicial updates emerge from Washington each quarter that may affect your business. Our free, quarterly webinars provide insight to help prepare you for the tax developments of the most interest to you, your business and other interested stakeholders.
Our Eye on Washington webinars assist CEOs, CFOs, financial executives and advisors, and other interested parties in navigating the complex tax environment. From federal tax reform to IRS guidance and healthcare reform, topics covered will provide the up-to-date information you need to help you plan for the future.
The document discusses various topics related to financial crime investigations including legal underpinnings of different legal systems, public versus private investigations, investigative tools and techniques, intelligence versus evidence, investigating across borders, tips and whistleblowers, investigating employees, court orders, beneficial owners, corporate registries, types of financial institution records, and summarizing financial records. Key lessons focused on understanding the different rules that apply to investigations depending on the jurisdiction and recognizing the importance of following the money trail using financial records.
Business Law Training | State and Local Taxes: Key Developments That Will Aff...Quarles & Brady
State and local tax laws are constantly changing in ways that will affect businesses, with over 1,000 changes each year across the 50 states and 97,000 local governments. Proposed federal tax reform could also impact state tax liabilities by changing what items are taxable. States are increasingly aggressive in areas like economic nexus laws, digital goods taxes, and unclaimed property audits to generate more tax revenue.
USA: State & Local Tax Top Stories of 2015Alex Baulf
2015 was notable in large part due to a series of decisions issued by state and federal courts which could pave the way for future resolution of several gray areas in state and local taxation. For example, the U.S. Supreme Court issued several major decisions impacting state and local taxes, including Obergefell v. Hodges and Comptroller of the Treasury v. Wynne. In Obergefell, the Court held that same-sex couples had the right to marry. States that did not recognize same-sex marriage prior to the decision issued guidance on filing returns after Obergefell. In Wynne, the Court determined that the failure of Maryland law to allow a credit against county personal income tax for Maryland residents for their pass-through income from an S corporation’s out-of-state activities that was taxed by other states was unconstitutional.
State and local tax: Top stories of 2015Andrea Platt
The document summarizes key state and local tax developments from 2015, including:
1) The US Supreme Court's Wynne decision determined Maryland's tax system violated the Commerce Clause by not allowing a credit for taxes paid to other states, costing Maryland $200 million in refunds.
2) Alabama enacted a regulation requiring out-of-state sellers to collect sales tax without a physical presence, testing the boundaries of the Quill decision.
3) Iowa and Kansas began allowing credits against local taxes paid in other states in response to Wynne.
Reporting Requirements for US Citizens with Foreign Assetsgppcpa
The presentation reviews the reporting requirements for US citizens with foreign assets and the remedies for non-compliance. You will view the appropriate tax forms needed for reporting, due dates and penalty amounts. Te difference between willful and non-willful will be explained.
Unclaimed Property – History, Audit Trends and Legislative Developments - Presentation delivered by Mike Stehly, Vice President, Tax, US Foods, Inc. at the marcus evans Tax Officers Summit Nov 13-15 2014, Las Vegas, NV
The document outlines the anatomy of a civil tax controversy process between a taxpayer and the IRS. It discusses the following key steps:
1. The IRS conducts a tax audit to ensure accurate tax reporting. All tax returns are subject to audit.
2. If the audit finds a deficiency, the taxpayer receives a "30-day letter" and can request an appeals conference or do nothing.
3. If no agreement is reached in appeals or the taxpayer ignores the letter, a "90-day letter" is sent requiring payment or a tax court petition within 90 days.
4. If the taxpayer petitions tax court, the case may be settled or proceed to trial and potential appeals. If not,
U.S. Taxes for foreign investors buying in ChicagoDerren Joseph
This document provides an overview of US taxes for non-US persons investing in US real estate. It discusses that taxes can have federal, state, and local/city components. An LLC is generally recommended for asset protection and tax benefits compared to personal ownership. Federal taxes include income tax on rental income at graduated rates up to 37% for individuals and 21% for corporations, as well as capital gains tax of 0-20% for individuals and 21% for corporations. Illinois state income tax is at 3.75-4.95% and Chicago charges a real property transfer tax of $5.25 per $500 of property value. Estate taxes also apply federally and by some states. Annual tax compliance typically costs $800-
The document outlines several rights and protections for victims of identity theft under federal law. These include the right to create an identity theft report, place fraud alerts on credit reports, dispute fraudulent information on reports, limit financial liability for debts incurred fraudulently, be protected and notified regarding legal proceedings against the identity thief, and receive assistance from the Federal Trade Commission and law enforcement.
Whistleblowers on Wall Street: A Guide to SEC Whistleblower Rewards and Prote...John Howley, Esq.
Thinking about blowing the whistle on securities fraud? Prominent whistleblower lawyer John Howley, Esq. walks you through the basic steps to reporting securities fraud (including anonymously), claiming whistleblower rewards, and protecting yourself from illegal retaliation. These slides are designed for both non-lawyer whistleblowers and lawyers who want to learn how to help their clients.
The document discusses how credit repair works under consumer protection laws. It explains that the Fair Credit Reporting Act (FCRA) requires all credit report data to be 100% accurate, verifiable, and timely. If a consumer disputes inaccurate, unverifiable, or outdated information, it must be removed from their report. The FCRA, along with other laws like the Fair Debt Collection Practices Act, give consumers rights to challenge credit report errors and restrict abusive collection practices. Credit repair works by finding issues within credit reports that do not meet the legal standards imposed by these consumer protection regulations.
This document discusses the hazards of unpaid payroll taxes. It begins with an overview of trust fund taxes, which are taxes employers withhold from employee paychecks for income tax and Social Security/Medicare. It notes that failure to remit these taxes can result in penalties against responsible individuals and potential criminal prosecution. It then covers topics like the trust fund recovery penalty assessed against those responsible, definitions of responsible persons and willfulness, appealing penalties, and resolving tax liabilities. It concludes with two case examples of potential trust fund penalty situations.
The document provides an agenda and schedule for a seminar on sales and use tax presented by Wade Farquhar. It includes breaks throughout the day-long seminar and an evaluation period at the end. The seminar will cover the differences between sales tax and use tax, specific transaction types and exemptions, nexus and interstate commerce rules, and how to determine a company's tax profile.
What Happens Off-Shore, Stays Off-Shore - NOT oliviajrowe
Dennis Brager discusses the issues and penalties surrounding undisclosed foreign bank accounts and assets. FBARs must be filed for foreign accounts over $10,000 and failure to do so can result in both criminal and civil penalties, including prison time and fines up to 50% of the highest account balance. The IRS now has access to data from FATCA, Swiss bank tax amnesties, whistleblowers, and foreign banks closing accounts of noncompliant U.S. clients. The offshore voluntary disclosure program allows taxpayers to avoid criminal prosecution but charges a penalty of 27.5% of undisclosed assets. Strict documentation is required for the disclosure.
In this powerpoint presentation, tax attorney Mike DeBlis discusses the mechanics of FATCA, the ripple effect that this law has had on those with unreported foreign assets, and why it is one of the most controversial laws that no one has ever even heard about.
This document summarizes key aspects of the US Foreign Corrupt Practices Act (FCPA). It describes the FCPA's anti-bribery and accounting provisions, what constitutes a foreign official, exceptions for facilitating payments and promotional expenditures, due diligence requirements, and penalties for noncompliance. It also provides examples of FCPA enforcement actions and analyzes several hypothetical situations involving third parties, gifts and entertainment, and mergers and acquisitions for potential FCPA issues.
On June 21st, the United States Supreme Court issued its long-awaited decision in South Dakota v. Wayfair, overturning the requirement that an out-of-state seller have physical presence in order for a state to require the seller to collect and remit state and local sales tax. Under Wayfair, substantial nexus exists if the taxpayer “avails itself of the substantial privilege of carrying on a business in that jurisdiction.”
In house Counsel Alert: Foreign and Domestic Corruption PresentationThis account is closed
The document discusses corruption of foreign public officials and domestic corruption laws. It provides an overview of international anti-corruption laws and enforcement developments in Canada, the US, and UK. It then analyzes the Griffiths Energy case, where a Canadian energy company paid bribes to Chad's ambassador, as a lesson for in-house counsel on addressing corruption risks from third parties.
Similar to Audited Through the Courts: The Troubling Trend in Flase Claims Act, Class Action and Municipal Litigation (20)
This document summarizes a webinar on managing workforces legally in 2022. It covers Covid-19 workplace policies including mandatory vaccination requirements. It also discusses federal developments like independent contractor standards. Other topics are restrictive covenants, criminal history discrimination laws, and data privacy acts. The webinar provides an overview of recent laws and guidance for employers to consider in developing compliant employment policies.
This document provides suggestions for different types of content that could be included in a client newsletter during the COVID-19 pandemic. These include: short articles on trending legal topics or explaining a specific legal issue; a brief video answering a question about working or living during the pandemic; summaries of interesting articles, podcasts or TV programs; highlighting content produced by clients; reporting on client successes in adapting their businesses to the pandemic; answering common client questions; and sharing personal stories and experiences during the pandemic that clients can relate to. The content is meant to be informative, engaging, and provide value to clients during this period.
Topics include the following:
- issues related to COVID-19 in the workplace, including paid leave rights and benefits, return to work standards, and work-from-home arrangements
- Supreme Court decisions on sexual orientation discrimination, - Age Discrimination in Employment Act and Equal Pay Act
- new regulations under the Fair Labor Standards Act
- expansion of employee rights and employer obligations under Illinois Law
- upcoming anti-harassment training deadline
- legal requirements taking effect in the second half of 2020 and in January 2021
- the impact of a California court’s decision regarding gig workers
- and more…
This document provides an employment law update covering developments in several areas:
- Overtime regulations remain unchanged from 2004 levels while the DOL solicits public comment.
- Several states and localities increased minimum wages in 2017.
- Courts are split on whether sexual orientation is protected under Title VII, and the EEOC takes the position that gender identity is also protected.
- The EEOC provides examples of discrimination based on gender identity.
- Guidance on independent contractor status and joint employer standards were withdrawn by the DOL in 2017.
- Changes are expected at the NLRB under the new Republican majority.
- Several states passed laws strengthening pregnancy accommodation requirements in the workplace.
With fall comes the hustle and bustle of getting back into routines and wrapping up projects before year end. However, we at Levenfeld Pearlstein always look forward to fall because that means it's time for our annual Back to School: Employment Law Update. Join us for an informational webinar to review developments over the past year and discuss tips to keep your workplace practices current in the coming year.
TOPICS:
• Update on overtime regulations and standards
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Audited Through the Courts: The Troubling Trend in Flase Claims Act, Class Action and Municipal Litigation
1. AUDITED THROUGH THE COURTS:
The Troubling Trend in False Claims Act,
Class Action, and Municipal Litigation
David C. Blum, Partner
Levenfeld Pearlstein, LLC
2 N. LaSalle St., Ste. 1300
Chicago, IL 60602
312.476.7557
dblum@lplegal.com
1
1
Adam P. Beckerink, Counsel
Reed Smith LLP
10 S. Wacker Dr., 40th Fl.
Chicago, IL 60606
312.207.6400
abeckerink@reedsmith.com
TAXPAYER’S FEDERATION OF ILLINOIS
16th Annual Illinois
State & Local Tax Conference
September 17, 2015
2. Overview
• Qui Tam Actions/State False Claims Acts
• Class Action Exposure for Over-Collection
• Efforts to Legislatively Confine Vendor
Exposures
• The ABA Model Act
• MTC Uniformity Project
• Class Action Consumer Fraud Damages for
Over-Collecting
• Municipal Litigation
3. Federal Court and Qui Tam Actions
• Qui Tam Actions
• Are brought by an informer, under a
statute that establishes a penalty for the
commission or omission of a certain act;
• Provide that such penalties may be
recovered in a civil action;
• Awards a part of the penalty to the
“whistleblower” who brings the action (with
the remainder going to the state or some
other institution).
4. Federal Court and Qui Tam Actions
• Federal False Claims Act first enacted in 1863
• Crack down on suppliers in the Civil War
• Provides for private enforcement actions against those alleged
to have defrauded the federal government
• 31 USC §§3729-3733
• Prohibits any person from defrauding the government by false
claims, records, or statements
• Excludes allegedly fraudulent tax claims
5. State False Claims Acts
• Approximately 30 jurisdictions have False Claims Acts
• Some states restrict their FCA provisions to Medicaid and/or
contractor/type “frauds”.
• A number of state FCA statutes contain explicit “tax bars”
prohibiting qui tam actions for allegedly false tax claims (e.g.,
CA, DC, HI, MA, NM, NYC, NC, TN, VA). Some states impose a
tax bar only with respect to income tax matters (e.g., IL, IN, RI).
• A number of states do not appear to restrict the action to a
particular subject matter (e.g., DE, FL, VN, NH, NJ).
• In 2010, New York became the first state to explicitly authorize
the application of its FCA to tax claims.
6. Types of Qui Tam Actions
• Traditional False Claims Actions
• False claims for payment from the state
• Reverse False Claims Actions
• False statements to avoid or reduce
payments to the state
• Reverse false claims actions give rise to
Qui Tam actions for tax.
7. Elements of Qui Tam Actions - Generally
• Defendant made or used a false statement
• To avoid or reduce payment owed to the state
• Defendant knew or should have known
statement was false
• “Knowledge” can be actual, but also includes
deliberate ignorance or reckless disregard.
• Specific intent to defraud not required.
• Legal dispute as to interpretation of law should
negate scienter.
8. Elements of Qui Tam Actions - Generally
• Proper relator
• Direct and independent knowledge
of false statement
• It cannot be merely “publicly
available” information
- relator must be “original source”
9. Timeline of a Qui Tam Action
• The relator (plaintiff) investigates
• Direct and independent knowledge of false
statement
• No publicly available knowledge unless relator
is original source and gathers evidence
• The relator (plaintiff) gives notice to the
Attorney General
• The relator files the complaint under seal
10. Timeline of a Qui Tam Action
• The Attorney General investigates and:
• Intervenes and:
- (1) takes over case,
- (2) dismisses case,
- (3) dismisses to pursue alternate State remedy, or
• Does not intervene and allows the relator to
proceed
• The complaint is unsealed and summons
issued to the defendant(s).
11. Typical Qui Tam Actions
• Sales & Use Tax Collection
• Lawsuits against remote or internet sellers
(e.g., Diamond litigation):
• Direct mail and online retailers
• Investigate nexus, returns, affiliates
• Shipping & handling charges
• Liquor license Cases
• Lawsuit against Sprint Nextel Corporation
(New York) for failure to charge sales tax on
100% of charges for flat rate wireless plans.
12. Typical Qui Tam Actions
• Unclaimed Property
• Lawsuits for failing to remit unused amounts
on prepaid calling cards.
• Actions against MetLife and Prudential for
allegedly failing to turn over unclaimed life
insurance funds.
• Possible Future Actions
• Corporate income tax (state permitting).
13. Defenses to Qui Tam Actions
• On the Merits
• No collection obligation (e.g., no
nexus) or obligation to pay
• Ambiguous law or regulatory
guidance – i.e., no scienter.
• Reliance on sound legal theory
14. Defenses to Qui Tam Actions
• Procedural Defenses
• Improper parties
• Relator not an “original source” of the information
• Conflicts between FCA and other areas of law (e.g.,
state constitution/tax provisions).
• Failure to state claim: no actual knowledge, no false
statement, no claim submitted to state.
• Government (already) had knowledge (e.g., prior
sales tax audit).
15. Qui Tam Liability
• Liability “per occurrence”
• Possible treble damages, plus “reasonable”
attorney’s fees and civil penalty.
• Civil penalty generally between $5,000 and
$10,000 per false claim.
- What is the false claim, the sale or the monthly return?
• Whistleblower generally awarded between
15% and 30% of the state’s recovery.
16. False Claims Act - Illinois
• Illinois False Claims Act (“FCA”) allows
whistleblowers (Relator) to bring qui tam actions
against taxpayers for false sales/use tax claims but
not income tax.
• Taxpayers found liable under the FCA are subject to
treble damages of the tax deemed owed or not paid,
plus a statutory penalty of between $5,500 and
$11,000 for each “false” claim.
• Taxpayers found liable are also required to pay for
the costs and attorney’s fees of bringing the action.
17. False Claims Act - Illinois
• Whistleblower Rewards
• Up to 30 percent of the recovered
proceeds.
• A whistleblower who planned or
initiated the false claim may even
recover an award provided that the
person is not convicted of a crime for
the false act.
18. False Claims Act - Illinois
• Whistleblower Protections
• A strengthened immunity provision and added
protections from retaliation encourage current and
former employees, contractors, or agents to
become whistleblowers.
• Employees, contractors, and agents are protected
from retaliation for transmitting any information for
the purpose of investigating, filing, or potentially
filing an action under the FCA, even if the
transmission “violate[s] a contract, employment
term, or duty owed the employer or contractor.”
19. False Claims Act - Illinois
• Elements Needed to Establish Liability
• Must show that the taxpayer “knowingly”:
• Presented or caused to be presented, a false or
fraudulent claim for payment or approval;
• Made, used, or caused to be made or used, a
false record or statement material to a false or
fraudulent claim;
• Made, used, or caused to be made or used, a
false record or statement material to an obligation
to pay or transmit money or property to the state
or a local government.
20. False Claims Act - Illinois
• “Knowingly”
• Means something more than actual
knowledge.
• Also includes acting in deliberate
ignorance or reckless disregard of the
truth or falsity of information.
21. False Claims Act – Illinois
• Disagreeing with Agency Guidance
• Liability may attach if a taxpayer takes a
reporting position that contravenes
published agency guidance, even if the
taxpayer has a good faith basis to
believe the guidance is incorrect, in
excess of the Department’s authority, or
unconstitutional.
22. False Claims Act - Illinois
• Not Limited to Fraud
• FCA specifically provides that there does not
have to be any showing of any intent to
defraud the government.
• The qui tam plaintiff or government must
simply prove the taxpayer made a claim that
it “knew” was incorrect.
23. False Claims Act - Illinois
• Other Considerations
• 10 year statute of limitations
• Taxpayer secrecy does not apply
• Conspirator liability, including tax
professionals
• Voluntary Disclosure may not protect from
liability
24. False Claims Act - Illinois
• Potential Defenses
• “Mere” negligence, not intentional
• Ambiguous law or regulatory guidance
• Reliance on sound legal theory
• Government knowledge
- e.g., prior audits or uniform industry practice
• Pending “civil action”
25. False Claims Act - Illinois
• Potential Defenses (cont’d)
• Public disclosure
• Who’s an appropriate whistleblower?
• Voluntary disclosure?
• State and Federal Constitutional
violations
26. False Claims Act - Illinois
• Recent Illinois Legislation – Amendment to Illinois False Claims Act:
Senate Bill 1828/House Bill 2803 (Introduced Feb 20, 2015)
• Senate Revenue Committee held a subject matter hearing on the
Illinois False Claims Act on September 9, 2015
• Amends 740 ILCS 175/4 (Illinois False Claims Act) by adding
subsection (e)(5):
• No court shall have jurisdiction over a civil action that relates to
or involves a false claim regarding certain tax acts administered
by the Illinois Department of Revenue (“DOR”), unless the
action is brought by the Attorney General.
27. False Claims Act - Illinois
Recent Illinois Legislation (cont’d):
Senate Bill 1828/House Bill 2803
• Amends 740 ILCS 175/4.5, which establishes several restrictions
upon actions for false claims relating to tax:
• The DOR shall have the sole authority to bring an administrative
action and the AG shall have the sole authority to bring a judicial
action for a false claim pertaining to taxes administered by the
DOR.
• Includes additional provisions concerning reporting,
enforcement, and payment of rewards.
• An award may be appealed exclusively to the Illinois Court of
Claims within 30 days of determination.
28. Recent False Claims Act Cases
• Chimney Rock Winery, LLC et al. v.
Constance Beard
• Violation of Commerce Clause
• Violation of Internet Tax Freedom Act
• Violation of the Separation of Powers
Clause
29. Recent False Claims Act Cases
• Chimney Rock Winery, LLC et al.
• Department’s position » pick-up option then
shipping not taxable – “separable” from
underlying sale. Kean and Private Letter
Rulings
• Illinois Attorney General either not reviewing
claim or disagreeing with the Department’s
position
30. Recent False Claims Act Cases
• Chimney Rock Winery and Miner Family Winery (Individual matters)
• Private Letter Rulings stating – Department’s position » pick-up
option then shipping not taxable – “separable” from underlying
sale. Kean
• Motions to Dismiss to be heard by Circuit Court on September
2, 2015
• August 28, 2015, Department issues proposed amendments to
Sections 130.410 and 130.415 – clarify the existing law and
regulations
• August 31, 2015, after knowing the Department’s position for
several months, Illinois Attorney General represents it will
review all current proceedings for pick-up option
31. False Claims Act
• Should FCAs be Applied to Tax?
• Upends protections for taxpayer rights,
including historical right to privacy in tax
matters.
• May discourage use of voluntary disclosure
programs.
• Incentivizes collection of transaction taxes,
which may expose taxpayers to class-action
consumer fraud lawsuits.
32. False Claims Act
• Should FCAs be Applied to Tax? (Cont’d)
• Removes tax administration decisions from
taxing authorities.
• Leads to disparate treatment among
taxpayers.
• Taxpayer deprived of essential gov’t function.
• Contravenes well-established procedures
designed to ensure efficient resolution of tax
disputes.
33. Qui Tam Actions – Retailer Liability Risks
• Unclear statutes and a lack of guidance can create
liability risks for retailers.
• If collect too much tax
• Class Action Law Suit
• If collect too little tax
• Risk of audit
• Qui Tam
• Costs of litigation far exceed actual tax cost or the cost of
an audit by the state
• Public relations impact
34. Class Action Basics
• Federal Class Actions
• Elements to Certify a Class:
• Standing
• FRCP Rule 23(a) Requirements (must meet all four):
• Numerosity
• Commonality
• Typicality
• Adequacy of Representation
• FRCP Rule 23(b) Requirements (must meet one of three):
• Individual Adjudication would Result in Prejudice
• Injunctive or Declaratory Relief
• Common Questions of Law or Fact
• State Class Actions
35. Class Action Law Suits
• Examples of Customer Liability Actions Against Retailers:
• Applications of coupons
• Jurisdiction rate assignments
• Sourcing conventions
• Product/Service taxability
• Case Examples
• Lauren Minniti v. Pizza Hut of America Inc., CACE14023335 (2015)
(sales tax on delivery charges).
• Chang Wong v. Whole Foods No. 1:15-CV00898 (2015) (tax on in-
store coupons); see also, Chang v. Target (same)
• Schojan v. Papa Johns No. 14-CA-003491 (2014) and Tucker v. Papa
Johns No. 3:14-CV-00618 (2014) (tax on delivery charges)
• Shaun Brandewie et al. v. Wal-Mart Stores Inc. et al., 1:14-cv-00965
(2014) (allegedly “shortchanged” customers by applying lower sales tax
rates to refunds).
36. Class Action Law Suits
• Vendors often can defend against the
actions because they used due diligence
and remitted funds to the jurisdiction – but
not without costs.
• State governments can also face class
action lawsuits.
37. Kean v. Walmart
• Kean bought a trampoline on walmart.com for $23.33
plus $7.97 shipping and $2.74 sales tax (Sept. 2006).
• Alleged sales tax should have only been imposed on
trampoline and not shipping and handling.
• One month later (October 2006), Kean filed a multistate
class action in Cook County Circuit Court alleging:
• Consumer fraud and deceptive business practices;
• Unjust enrichment; and
• Injunctive relief – creation of a “class protest fund”
• Nov. 2006 filed a TRO and preliminary injunctive relief
38. Kean v. Walmart
• From Walmart’s perspective, they collected and remitted the tax,
which is now held by the state.
• So if money is owed to plaintiffs, the state should refund it…
• IDOR then intervene as party defendants and among other things,
filed a motion to dismiss plaintiffs’ case.
• Nov. 2009, Illinois Supreme Court rules that Walmart correctly
charged and collected sales tax on shipping charges – no refund.
• Key take away:
• One customer, with no sales tax experience or inside knowledge,
dragged Walmart through the courts for years, causing it to incur
sizable legal bills and no good way out. Plaintiff deprived taxpayer and
the state of the efficient administration of an essential government
function.
39. Recent Illinois Cases
• Wong v. Target (Illinois Federal Court) – Coupon Case
• Bought an item for $10, used a $1 coupon, alleged he was
overcharged sales tax by applying tax on $10, not $9.
• Causes of Action: Consumer Fraud (unfair and deceptive acts and
practices), Common Law Fraud, and “Money Had and Received” (i.e.,
unjust enrichment)
• Damages Sought: (1) Compensatory damages ($0.02 in his case); (2)
Punitive damages of “at least equal to 1% of annual revenue of each of
defendant’s Illinois stores during each year the violations occurred;” (3)
attorney’s fees; and (4) such other relief court deems
• Wong v. Whole Foods (Illinois Federal Court)
• Largely identical to the Target case
• Case recently settled for an undisclosed sum.
40. Recent Cases
• Papa John’s International (Illinois & Florida)
• “Illegally” collected sales tax on delivery fees
• Consumer fraud, deceptive trade practices, etc.
• Florida case recently settled; Illinois still pending
• Pizza Hut (same)
• BJ’s Wholesale Club (Florida & Pennsylvania)
• “Illegally” overcharged and kept sales tax on items purchased
through discounts, coupons and other price reductions offers
(e.g., rebate coupon “dealer discount”)
• “Prospective class consists of many thousands, if not tens of
thousands, of BJ’s members who were improperly charged
under the guise of BJ’s collection of sales tax”
41. Recent Cases
• Walmart & Sam’s Club
• Pennsylvania
• Named plaintiff bought two cans of shaving gel with a buy one get
one free” coupon. Total purchase $2.97.
• Alleges Walmart overcharges sales tax in PA stores and Internet
sales and has “misappropriated millions of dollars…”
• Ohio
• Retailer shortchanged customers who returned items to different
stores by applying lower sales tax rates
• Breach of contract – violates terms of sale by refunding less than the
original purchase price
• Walmart seeks to remove to State Tax Commission from federal
court since they are exclusive arbiter of state tax refund claims.
42. Tax Collection Liability Litigation
• Class actions can be brought against the government
jurisdiction –
• Arizona Department of Revenue v. Bernard J. Dougherty,
29 P.3d 862: class action lawsuits against the State were
permitted in Tax Court.
• Granados v. County of Los Angeles, CA Court of Appeal,
Second District, No. B200812 (March 28, 2012): a
taxpayer can file a class action claim for refund of CA
local telephone users taxes paid. Before filing the claim
the plaintiff must first file a claim that contains the
information required by the Government.
43. American Bar Association Model Act
• Prepared by the Government Submissions and
Legislative Whitepapers Subcommittee with the
State and Local Tax Committee
• Paper balances conflicting of interests of sellers,
purchasers and state and local governments.
• Subcommittee drafted a model that would not
violate SSUTA but would provide an exclusive
remedy for a purchaser to obtain a refund of
over-collected tax.
44. American Bar Association Model Act
• The paper outlines 15 Governing principles. Some
highlights include:
• Principle 6 – Sellers are, in collecting tax from purchasers, and
paying it over to the taxing jurisdiction, acting merely as agent
for the taxing jurisdiction. Accordingly, sellers should not be
subject to claims arising from or in any way related to an
overpayment by purchasers or liability to such purchasers or
anyone else other than a taxing jurisdiction revenue department,
regardless of the nature of the claim or cause of action
asserted, unless the party asserting the liability demonstrates
that in collecting the tax the seller acted with willful intent to
defraud the purchaser.
45. American Bar Association Model Act
• Principle 9 – Any purchaser who has overpaid a tax should
be entitled to a refund if a timely and adequate claim is filed.
• Principle 11 – A taxing jurisdiction has a legitimate interest in
ensuring that duplicate refunds are not issued. Accordingly, a
taxing jurisdiction may establish procedures for that purpose.
• Principle 14 – A taxing jurisdiction has a compelling interest
in the fair and equitable interpretation of its transaction tax
laws and should be an indispensable party in any litigation
determining the proper application of those laws.
46. American Bar Association Model Act
• Major provisions:
• Section 4 sets forth Purchaser Recourse provisions
• Purchaser’s relief is limited to a refund claim
pursuant to §5
• Seller should not be party to any action
• Section 5 sets forth Refund Procedures
• Purchaser may file a claim with the seller with time
limits (90 days) for response
• Purchaser may under certain circumstances file a
claim with the taxing jurisdiction
47. MTC Project on Class Action/False Claims
• MTC Sales Tax Uniformity Subcommittee formed
a drafting group (public and private sector
members) to address class action and false
claims issues
• December 2014 – Subcommittee proposed that
executive committee recommend states adopt
ABA Model Act
• MTC is working toward adopting a model similar
to the IRS.
48. Consumer Protection Violations?
• Kawa v. Wakefern Food Corporation, 24 NJ Tax
144 (App. Div. 2009)
• Class action not permitted
- Cited Streamlined and exclusive remedy
provisions in New Jersey Statutes
• Consumer fraud damages not applicable
because remedies governed by sales tax
laws
49. Consumer Protection Violations?
• Nava v. Sears, Roebuck and Co., Illinois Appellate Court, First
District, No. 1-12-2063 (July 29, 2013)
• Tax on coupon discounts for converter boxes erroneously
collected
• Customer brought suit under consumer protection act
• Also sought certification of a class action
• Trial court dismissed the case, but Appellate Court
reinstated and remanded the consumer protection act
claims
• Found that Sears was not statutorily authorized to
collect this tax
50. Consumer Protection Violations?
• Loeffler v. Target Corporation, Slip Opinions No. 5173972
(May 1, 2014)
• May a consumer in a sales tax transaction sue a retailer
under the consumer protection laws for allegedly
improperly collecting sales tax reimbursement on a
transaction the plaintiff contends is not subject to sales
tax? Target collected sales tax reimbursement from
consumers who purchased a cup of coffee “to go.”
• Held that the refund scheme created by California tax code
provides the exclusive remedy for a dispute over the
applicability of the state tax laws to retail transactions.
51. False Advertising Violations?
• Yabsley v. Cingular Wireless LLC, 176 Cal.App.4th 1156
• Did Cingular violate the CA False Advertising Law when it
advertised it would collect sales tax reimbursement on
sales of cellular phones?
• Under Regulation 1585, the retailer must pay sales tax
(and may collect sales tax reimbursement) on the full
unbundled price of the phone when it sells a cell phone
bundled with a service contract
• Court of Appeals agreed with the trial court that
regulations provide the same safe harbor for suits under
the UCL that statutes do. The class action was thus
dismissed.
52. Municipal Litigation
• Increase rise in Municipal (and related) Litigation
• Municipalities and other governmental authorities are
starting to “take matters into their own hands.”
• Problem:
- they do not afford taxpayers the same administrative options and
remedies that the State of Illinois offers.
- Issues resolved through costly litigation
- They may seek to tax something IDOR already found to be
nontaxable.
• Examples:
- RTA, et. al. v. Kankakee, et. al. (local sourcing of sales tax)
- Village of Bedford et. al. v. Expedia, et. al. (hotel occupancy tax)
53. Municipal Litigation (Cont’d)
• Who is in charge?
• RTA: “IDOR does not have exclusive nor primary
jurisdiction”
- Thus, even though IDOR is the statutory agent to audit on their
behalf, RTA and other municipalities assert they can also seek tax
from taxpayers that have already been audited by IDOR and find
taxability where none was found previously.
• Note, under ILCS 2505-475, the Department is
empowered to correct errors on distribution of taxes
between municipalities and counties.
• New Proposed Regulations to give Illinois counties and
cities enhanced information sharing from the state.
54. Summary
• There is an increased and troubling trend of tax liability
allegations and accusations from parties other than the
Department of Revenue and who typically have little
factual information and/or specific tax knowledge.
• Taxpayers are denied the opportunity of the efficient
governmental function and privacy afforded to them by
traditional audits and administrative appeal mechanisims.
• Third party litigation causes taxpayers to be audited in
the courts in a very expensive and public way –
oftentimes on a very narrow issue – that may already
have been audited and found to be nontaxable by IDOR.
55. Questions?
David C. Blum, Partner
Levenfeld Pearlstein, LLC
312.476.7557
dblum@lplegal.com
Adam P. Beckerink, Counsel
Reed Smith LLP
312.207.6400
abeckerink@reedsmith.com