MetLife must pay $2M tax-amnesty fine, court rules

Illinois Supreme Court: MetLife must pay $2M tax fine, should have known debt during amnesty

Associated Press

SPRINGFIELD, Ill. (AP) -- Metropolitan Life Insurance Co. is on the hook for a $2.2 million tax penalty imposed by a 2003 amnesty program even though it didn't know it owed extra taxes at the time, the Illinois Supreme Court ordered Thursday.

In a 4-2 decision with one justice not taking part, the court ruled that the phrase "all taxes due" in the amnesty act means just that: taxes due, whether the taxpayer knows they are.

MetLife must forfeit the penalty on underpaid taxes from 1998 and 1999, despite not knowing what it had to cough up until an audit was finished in 2004, eight months after the amnesty ended.

Lawmakers adopted an amnesty program that ran for six weeks in fall 2003, allowing scofflaws to pay back taxes dating to 1983 without penalty. It generated $175 million from 70,000 sheepish late-comers, $135 million more than anticipated. Those who got caught or came forward after the amnesty had to pay a doubled, 200 percent penalty.

Justice Rita Garman, writing the court's opinion, found a simple definition for the language of the tax-collection law.

"The plain and ordinary meaning of the phrase 'all taxes due' in the 2003 Amnesty Act refers to taxes that are due based upon properly reportable income at the time the taxpayer's tax return is required to be filed," Garman wrote. "Therefore, when MetLife failed to pay those taxes during the amnesty period, it became liable for the 200 percent interest the department imposed."

Taxpayers could also avoid the penalty by making a "good-faith estimate" of underpaid taxes during the amnesty — the idea being that although auditors don't share details about what they're looking at, taxpayers generally know the areas of concern based on the questions they're asked.

In 2000, three years before the amnesty program, the IRS began a routine audit of MetLife's returns from 1997-99, followed by an Illinois Department of Revenue audit in 2002.

When MetLife learned in mid-2004 it had underpaid its taxes, it conceded it owed late-payment interest of 100 percent, but only under protest paid the 200 percent the Revenue Department demanded.

John Calagna, MetLife communications vice president, said Thursday that company officials "need time to evaluate the ruling" and had no immediate comment.

Justice Ann Burke, in a dissent joined by Justice Lloyd Karmeier, found the majority opinion difficult to swallow, saying it was not what lawmakers intended with the law.

"The majority's interpretation of the Amnesty Act punishes MetLife for failing to prepay an unascertainable amount of taxes before those taxes were actually due," Burke wrote.

She added that the company got slammed with the extraordinary interest for not paying a tax that state law "did not require it to pay, and which the department could not have collected before the audit was concluded, a time long after the amnesty period had ended."

The court noted that its decision jibes with one by a state appellate court in another challenge to the 2003 law by Marriott International Inc. That case involves interest penalties of about $657,000.

For reasons not explained in the opinion, Chief Justice Thomas Kilbride took no part in the MetLife decision.

Illinois conducted another amnesty program in 2010. It yielded $408 million from 78,200 taxpayers.

___

The case is Metropolitan Life Insurance Co. v. Hamer.

Online: http://www.illinoiscourts.gov/

___

Contact AP Political Writer John O'Connor at https://twitter.com/apoconnor

Rates

View Comments (2)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Living Paycheck to Paycheck? Here's Your Solution.

    This step-by-step article exposes a ridiculously simple method to add $1,000's to your bottom line year after year.

    AdChoicesMedia ForceSponsored
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

    Credit.com
  • Romney-Sized IRAs Scrutinized as Government Studies Taxes

    The preliminary report attaches data to an issue that drew attention during the 2012 presidential campaign, when Republican nominee Mitt Romney reported an IRA worth $20 million to $102 million. Senate Finance Committee Chairman Ron Wyden said many of these "massive" accounts come from deals…

    Bloomberg
  • Boeing may have outfoxed Musk, but it could have bigger problems

    Elon Musk is arguably one of the greatest entrepreneurial minds of the 21st Century, but he was outsized an old school aerospace giant. Boeing won the bulk of NASA’s contract for a space taxi.  One of the other companies vying for the deal is SpaceX, the company headed by Tesla’s Musk, will get a…

    Talking Numbers
  • Shailene Woodley's Most Ridiculous Quotes

    This rising starlet has made quite the name for herself as Hollywood's moon child, surprising audiences with her unique outlook and interests.

    AdChoicesAnswers NowSponsored
  • The Government Keeps Helping People Buy Failing Cold Stone Creamerys

    Would you loan someone money to buy a Cold Stone Creamery franchise if you knew that more than a quarter of those loans default? Over the last decade, franchisees in the Cold Stone Creamery ice cream chain defaulted on 29 percent of working-capital loans backed by the government, costing taxpayers…

    BusinessWeek