Court Dismisses FCA Suit Alleging that Grocery Chain Failed to Collect Sales Tax

On March 22, 2018, an Indiana state trial court judge granted a motion to dismiss a case in which the relator alleged that a grocery chain knowingly misclassified goods to avoid collecting and remitting state sales tax. The dismissal is a blow to serial qui tam relators who, with no inside information, bring claims against companies based solely on a presumption that they must be non-compliant with an industry regulation.  While a provision in the federal FCA, found at 31 USC § 3729(d), bars actions for false claims arising under the Internal Revenue Code, companies must still consider potential exposure in the jurisdictions that permit FCA suits arising from state tax matters.