You can read an update on the Illinois situation here.
There were several big developments these past two weeks in the ongoing saga around tax on shipping charges in Illinois. We’ve been keeping a running list of resources and articles related to this issue at the bottom of our blog post, Are Shipping Charges Taxable in Illinois. Here’s an update on the most recent developments.
Wine Institute Files Suit
Wine Institute, along with three different member wineries (Chimney Rock Winery, Miner Family Winery, and Staglin Family Vineyards), jumped in and filed suit in Cook County Circuit Court in efforts to fight back against the Illinois “False Claims” lawsuits. The suit names Constance Beard, Director of the Illinois Department of Revenue and Lisa Madigan, Illinois Attorney General. Wine Business Monthly has the scoop, including a copy of the complaint.
Attorney General Provides Settlement Guidance
In a letter that was sent to attorneys involved in Qui Tam cases related to tax on shipping charges, the Illinois Attorney General’s office provided the guidance below. The letter was also included as “Exhibit C” in the complaint, which can be viewed on WineBusiness.com. Of note there, is that cases with less than $1,000 in “potential shipping tax due” will be dismissed following a signed affidavit. Further, for parties above $1,000 interested in settling their cases, the guidance shows a calculation of double the potential shipping tax due + $3,000 capped attorney’s fees. The letter states::
The State is seeking to resolve the “shipping and handling” cases through a uniform approach to settlement. The State and Relator have discussed this approach and have agreed to the following:
- Relator will voluntarily dismiss all shipping and handling cases involving potential shipping tax due (i.e. single damages) of less than $1,000.
- As to shipping and handling cases with potential shipping tax due of $1,000 or greater, the State and Relator agree to settle those cases for two times (“2X”) the sales tax potentially due on shipping and handling charges for all of defendant’s sales to Illinois consumers from November 19, 2009 (the date of the Illinois Supreme Court’s decision in Kean v. Walmart) to the present (the “Time Period”). This 2X settlement amount will include any amounts due to the Relator for a relator’s share of the proceeds pursuant to 740 ILCS 175/4(d).
- If Relator has engaged in no motion practice or discovery, Relator agrees to cap its attorney’s fees, costs, and expenses (combined) at $3,000 for cases settled pursuant to the terms of item 2 above. The cases involving no motion practice or discovery as of the date of this letter are identified under Category I in the attachment to this letter.
- In the other cases, any amounts due to the Relator for reasonable expenses and reasonable attorney’s fees and costs, pursuant to 740 ILCS 175/4(d), should be either negotiated separately between the Relator and defendants or determined by the Court via the Relator’s filing of a petition for expenses, attorney’s fees, and costs. These other cases are identified under Category II in the attachment to this letter.
What does it mean?
Hopefully, these two developments indicate that we’re moving closer to a long-term solution to this morass. Wineries that are involved in a lawsuit or that are shipping to Illinois consumers should become familiar with both of these developments and understand how they might impact their situation. Wineries with cases and less than $1,000 in “potential shipping tax due” especially should understand their options for potential dismissal.