Chicago law firm benefits from tax whistleblowing

by Walter Olson on December 10, 2012

According to the retailers group [Illinois Retail Merchants Association], Mr. [Stephen] Diamond’s Chicago law firm, Schad Diamond & Shedden P.C., has filed no fewer than 238 lawsuits in recent years against retailers small and large, which in its view failed to collect said shipping-and-handling sales taxes. Since the suits have been filed under a “whistle-blower” section of law, the firm is entitled to as much as 30 percent of any recovered taxes as well as attorneys’ fees for its trouble. And because it’s often easier and cheaper for defendants to settle rather than continue to fight, Schad Diamond reportedly has pocketed millions of dollars.

The office of Illinois Attorney General Lisa Madigan says the whistleblower provisions were intended for use by insiders disclosing misconduct rather than by outsiders, while “Illinois Revenue Director Brian Hamer says [the wave of suits] ‘has given Illinois a black eye’ and victimizes those who have made only an ‘inadvertent’ mistake.” [Greg Hinz, Crain's Chicago Business]

{ 1 comment }

1 AMcA 12.10.12 at 1:43 pm

Well, as long as that’s the only “black eye” Illinois suffers everything is going to be just fine!

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