CA, Inc.'s Answer and Counterclaim - Reed Smith

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From the state tax library of Reed Smith LLPwww.reedsmith.com/DEtaxfor other related documents, please email ksollie@reedsmith.com75. The State's demands for property to which it is not entitled under the law isconsistent with the State's practice of utilizing its Statute as a source of generating substantialrevenue for the State in an arbitrary and capricious manner and without any basis in law or fact.76. The State's demand for abandoned and unclaimed property to which it is notentitled constitutes a taking from CA.77. Based in part upon the fact that the State knows that many of its demands areimproper under well-established legal principles, the State is acting arbitrarily and capriciouslyin seeking to maximize state revenue at the expense of the corporations that chose to organize inDelaware.CA's Response to the State's Improper Demands78. CA requested additional time to assess the State's January 15 th demand andanalyze the discrepancy between the State's demand and CA's calculation of the amount owed tothe State, which was based on CA's self-audit and records.79. On or about February 12, 2008, CA notified the State that it disputed the amountof abandoned property identified by the State as being owed to it, and provided materials to theState in support of its calculation of the amount owed to the State. A true and accurate copy of aletter from CA to Camilla M. Ridgeway, dated February 12, 2008, is attached hereto as ExhibitC.80. CA agreed to pay some of the increased amount reflected in the State's demand ina showing of good faith and in an effort to compromise and resolve its differences with the State.CA also specifically addressed the inaccuracies contained in the State's calculation in manycategories of property, and provided additional information to the State in order to clarify thoseissues for the State.- 54 –
From the state tax library of Reed Smith LLPwww.reedsmith.com/DEtaxfor other related documents, please email ksollie@reedsmith.com81. CA also expressly reserved its rights regarding payment of certain fundsdemanded by the State, but which CA questioned the State's ability to claim.82. CA also disputed the State's use of estimates in the calculation of potentialliability owed to the State for distinct periods of time for which CA had detailed and accuraterecords. Specifically, CA told the State that it had provided the State with detailed and accuraterecords identifying the names and addresses of Owners allegedly owed credits at issue forperiods in which the State sought to use estimates to calculate the amount owed to it by CA.83. As a result of those detailed records, CA informed the State that the amount itowed the State was significantly smaller than that being claimed by the State, and that theremaining amounts had been paid to the individuals identified in the records and/or escheated tothe states of their last known address pursuant to the priority rules articulated in Texas v. NewJersey, 379 U.S. 674 (1965), Delaware v. New York, 507 U.S. 490 (1993), and Nellius v.Tampax, Inc., 394 A.2d 233 (Ct. Chancery 1978).84. CA and the State engaged in discussions spanning several months concerning thecalculation of the amount owed by CA to the State pursuant to the VDA.85. On or about April 24, 2008, in an effort to further demonstrate the reliability andcompleteness of the books and records it presented to the State, and to satisfy the State'sincreasingly onerous demands, CA presented the State with the results of testing it conducted ofits books and records. By use of random testing, CA demonstrated to the State the reliability ofthose records, showing that aged credits from earlier years either remained on the records reliedupon by CA, or the credits were resolved with the relevant customer.86. Without any basis, the State ignored the testing results and continued to questionthe validity of the records relied upon by CA, notwithstanding that CA was so confident the- 55 –
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CA, Inc.'s Answer and Counterclaim - Reed Smith

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