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Biz groups fighting off tax “bounty hunter” which they accuse of breaking the law

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Illinois

* Illinois News Network…

The Illinois Retail Merchants Association said Monday that it had obtained emails showing that municipal officials illegally shared local businesses tax information with an outside company that makes money auditing businesses on behalf of local governments.

Illinois Retail Merchants Association President and CEO Rob Karr read off emails the association acquired from local officials that shared tax information from local businesses with Chicago-based auditing firm Azavar. In a series of FOIA requests, Karr’s organization found officials from Elgin, Lockport, Homer Glen and Rockford being solicited by Azavar to participate in potentially illegal sharing of local businesses sales tax data to allow Azavar to do audits to potentially recover sales tax revenue a business would owe the local government.

“Sharing this information is outside of the law,” Karr said. “We wouldn’t do this to our individual taxpayers. Why would we do this to our businesses?”

In the emails, city officials were instructed by Azavar employees to turn over documents to the firm via a compact disc.

“Please do not copy us on the email, as we are still working with IDOR to be able to contact them directly on behalf of our clients,” Azavar Vice President Scott Shamberg wrote in an email to Lockport Finance Director Erik Brown.

Azavar President Jason Perry refused to comment on the emails.

Business tax information is generally regarded as confidential and municipal officials often go to lengths to make sure it is kept secret. Sharing such information could be costly for the local officials. According to the Illinois Department of Revenue, releasing information shared with the local officials via their reciprocal agreement on exchange of information is punishable with up to a $7,500 fine.

More here and here.

* Greg Hinz…

[Opponents] also charge the bill largely is the creation of Azavar Government Solutions, a Chicago-based auditing and consulting firm that has been politically active in recent years. The company has donated more than $200,000 since 2012, most of it to state lawmakers, including $11,000 to House Speaker Mike Madigan and $4,000 to House GOP Leader Jim Durkin.

One major watchdog is siding with the business groups in this fight.

Azavar is “a bounty hunter” that gets a contingency fee of as much of 50 percent of what it collects, says Taxpayers’ Federation of Illinois President Carol Portman. The bill “would essentially outsource a government function to someone whose interests are not aligned (with the public interest),” she added.

Also opposed to the bill as it’s now written is the Revenue Department. “Third-party entities would be able to determine how the department uses its audit resources,” with the agency potentially swamped with private requests for probes, said spokesman Terry Horstman.

But Paul Rosenfeld, a lobbyist who represents the Illinois Coalition of Local Governments and lobbies for Azavar in Cook County, said the Revenue Department “has made mistakes. They don’t like it when someone looks over their shoulder.” Rosenfeld, who’s also the 47th Ward Democratic committeeman, said it’s not true, as Portman suggested, that the bill is the first step toward privatizing Revenue Department collections. […]

Rosenfeld said his group examined 66 cases and found in nearly half of the instances, the Revenue Department made mistakes, some involving hundreds of thousands of dollars.

The Revenue Department objections “are a scare tactic by the (Rauner) administration,” Welch said. And in fact, the bill will strengthen confidentiality by shifting data from CD roms to an encrypted website, he said.

Azavar’s campaign contributions are here.

posted by Rich Miller
Wednesday, Apr 25, 18 @ 10:43 am

Comments

If the IDOR was adequately doing it’s job, there wouldn’t be a need (or a market) for firms like Azavar. The company (and others) should be viewed as a necessary resource for local communities to ensure that sales tax revenue is being received by the right community.

IDOR also does a poor job of ensuring that the appropriate amount of tax is collected. Courts have ruled that competitors have a right to pursue retailers for their business practices. Case in point -

https://cookcountyrecord.com/stories/511396320-state-tax-investigation-not-adversarial-enough-to-thwart-lawsuit-vs-best-buy-over-unpaid-sales-taxes-appeal-panel

Comment by Anon Wednesday, Apr 25, 18 @ 11:25 am
Madigan getting the lions share of the money is interesting. His firm works on reducing residential/commercial property tax bills. And his benefactor Azavar increase the sales tax revenue for municipalities. A perfect circle !

Comment by Texas Red Wednesday, Apr 25, 18 @ 11:33 am
Holy moosecrap……so you’re telling me that this company is illegally obtaining tax records from IDOR on other companies?
Wow is that such a lawsuit
Hand delivered.
So ABC hardware could go to Avazar and get the goods on the local Lowes or Home Depot? Or visa Versa?
Oh this is going to be every kind of ugly
I wonder why this is not front page news?
Thanks Rich, once again

Comment by Honeybear Wednesday, Apr 25, 18 @ 11:34 am
So it’s okay for IDOR to publish state employees who are in default of income taxes. But it’s not okay for them to ascertain which business are not paying municipal taxes which have been collected by consumers.

Comment by Claud Peppers Wednesday, Apr 25, 18 @ 11:45 am
Opps, should read collected from consumer.

Comment by Claud Peppers Wednesday, Apr 25, 18 @ 11:46 am
Anon, I imagine you are partially right. I’d bet money that IDOR is understaffed and won’t fill the open union tax auditor positions simply because they are union. This creates the vacuum that Azavar is trying to exploit for profit. It’s still illegal what they are doing and exposes the state to lawsuits that us taxpayers will have to pay for. So in a sense IDOR is at fault if they are not fully staffed. Ask any agency. Union positions are left open and I filled because of Rauner. Just like with the billions in unpaid state contracts, you and I end up picking up the tab.

Comment by Honeybear Wednesday, Apr 25, 18 @ 11:49 am
The crux of this issue: business don’t want to get caught pocketing taxes paid by their customers — either because they intentionally pocketed it or they’re too careless to do it right.

Is it bad that their info might be shared? Sure. But it’s bad that they’re stealing taxes paid by their customers instead of remitting them.

Maybe, just maybe, IDOR could do a better job if the state spent more money on audit, enforcement, and collections — and maybe, just maybe the state could fix it’s problem by levying taxes to actually pay for the services it’s supposed to be or is trying to provide.

Comment by Anon Wednesday, Apr 25, 18 @ 2:34 pm
@Honeybear — I wish it were that simple.

Comment by Anon Wednesday, Apr 25, 18 @ 2:34 pm
If there is a problem, then it should be fixed, the right way. Opening up this can of worms (hired gun tax collectors?) surely isn’t the solution.

Comment by notsosure Wednesday, Apr 25, 18 @ 2:46 pm
How ‘bout that vote Avavar lobbyists

Comment by Revolver Wednesday, Apr 25, 18 @ 5:02 pm
=IDOR also does a poor job of ensuring that the appropriate amount of tax is collected. Courts have ruled that competitors have a right to pursue retailers for their business practices. Case in point - ==

You obviously haven’t read the case. It just says that the law that bars this kind of lawsuit when the taxpayer is already in a legal with the Department does not apply until the taxpayer and the Department are in court or in an administrative hearing. It doesn’t say or imply anything about the competence of the Department or how tough they might be on taxpayers.

BTW, Welch’s bill as voted down in the House would not have allowed the Azavars of this world to use taxpayer information to verify the accuracy of returns filed with the Department.

Comment by Whatever Wednesday, Apr 25, 18 @ 8:08 pm