Action was brought against Defendant under the Illinois False Claims Act by Relator, qui tam, for knowingly failing to collect use tax on shipping charges for Internet and catalog sales. After trial, the court found that Relator failed to prove that Defendant acted with reckless disregard without ruling whether Defendant had a duty to collect the use tax. Court properly entered judgment in Defendant's favor. During an audit, Defendant previously disclosed to the Illinois Department of Revenue that it did not collect use tax on its shipping charges and the Department concluded that Defendant was in compliance with the law. Defendants employees also testified that Defendant believed its shipping costs were not a part of the taxable selling price of the goods. While Defendant may have been negligent in not reviewing its policies regularly, this was not enough to demonstrate reckless disregard in the context of a False Claims Act violation. (CUNNINGHAM and CONNORS, concurring.)
Illinois Appellate Court
Criminal Court
Use Tax; False Claims Act