I try to spare readers from too many "can you believe this happened in a case?" entries, but on occasion, I do find just such a story worth highlighting. The firm of Horwood Marcus & Berk ("HMB") recently highlighted an "opportunistic" (others might say, enterprising) relator and law firm in Illinois who, HMB reports, have brought over 200 cases under the Illinois False Claims Act against retailers operating nationwide who "allegedly have fraudulently failed to collect tax on the shipping portion of sales to Illinois customers." See "Opportunistic 'Whistleblower' Exploits Illinois False Claims Act." Though it does not list the cases, HMB claims that the relator's claims are based on tax advice provided by the Illinois Department of Revenue to retailers. Relator's "lawsuits accuse retailers of committing fraud by not collecting tax on shipping charges to Illinois customers, a position that the Department of Revenue has endorsed explicitly in the case of several tax payers, and more generally in over 30 information letters." Moreover, HMB essentially accuses the relator and the plaintiff's firm that has brought all 200 cases of being "opportunists," as the relator reportedly has no insider knowledge and bears little resemblance to the classic whistleblower. HMB complains further that taxpayers "attempting to understand Illinois law on the proper taxation of shipping charges will likely finish the exercise with more questions than answers" and that the Illinois Department of Revenue is partly responsible for creating this "muddled and confusing . . . legal landscape."
HMB predicts that another frontier for opportunistic qui tam suits will be claims over the payment of unclaimed property obligations, another area where HMB believes there is real confusion about what property is subject to unclaimed property laws and must be reported to the state.
by A. Brian Albritton
March 27, 2012