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.comrecords were reliable, CA repaid millions of dollars to its customers and other states in relianceupon these records.87. Once again, in an attempt to continue to satisfy the State and in an effort toresolve the VDA, CA offered to allow the State to pull its own testing from aging reports inorder to satisfy themselves as to the completeness of the master files. The State refused theoffer, even though by doing so it could have resolved the dispute.88. Instead, the State confirmed that it was "not interested in receiving/reviewing"further records that CA was willing to provide which would demonstrate the reliability of CA'sprevious submissions, including the names and addresses of the rightful owners of the property.State's Unlawful Demand and Imposition of Interest89. Without justification and inconsistent with the terms of the VDA, on or aboutJune 3, 2008, the State sent CA a statement of findings and request for payment in the amount of$8,218,410.46 (the "June 2008 Demand"). A true and accurate copy of a letter from Camilla M.Ridgeway to CA, dated June 3, 2008, is attached hereto as Exhibit D.90. Only six months after it estimated that CA owed nearly fifty percent less, andafter CA provided the State with further proof of the validity of its books and records, the Stateagain changed its position on the amount CA allegedly owed, claiming it was $6,794,530.20 inprincipal plus $1,423,880.26 in interest.91. In its June 3, 2008 correspondence, the State acknowledged the existence of theVDA with CA.92. The State calculated its June 2008 Demand based on its review of the compliancereview report provided to the State by APS on CA's behalf. Once again, the State took theinconsistent position of accepting CA's books and records as valid in order to estimate liability,but incomplete and insufficient for CA's calculation of alleged liability.- 56 –
From the state tax library of Reed Smith LLPwww.reedsmith.com/DEtaxfor other related documents, please email ksollie@reedsmith.com93. The State did not nullify the VDA or attempt to initiate an audit of CA's booksand records beyond the review already conducted by the States' three employee auditors beforedemanding that CA pay $8,218,410.46 to the State in the June 2008 Demand.94. The State's June 2008 Demand included over one million dollars in interest incontravention of its agreement with CA to waive the payment of such interest.95. In its June 2008 Demand, the State did not cite to any provisions of the VDAallowing the State to disregard the amount identified by CA as being owed to it or the basis fordisregarding said amount.96. In its June 2008 Demand, the State did not identify any failure by CA to fulfill itsobligations under the VDA.97. In its June 2008 Demand, the State did not state that CA had delayed the VDA oracted in bad faith.98. The June 2008 Demand provided no explanation for the State's assessment ofinterest on CA and did not request that CA provide the State with any additional information inconnection with the VDA.99. The June 2008 Demand did not identify any outstanding information, previouslyrequested by the State in connection with CA's VDA, that had not been provided to the State byCA.Further Offer of Amounts Due100. On or about June 26, 2008, CA outlined its objections to the amount demanded bythe State, including its objection to the inclusion of interest by the State in its calculation and theuse of estimates to calculate the amount owed the State for periods for which CA had detailedrecords ("June 26, 2008 Proposal"). A true and accurate copy of a letter from CA to MarkUdinski, dated June 26, 2008, is attached hereto as Exhibit E.- 57 –
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CA, Inc.'s Answer and Counterclaim - Reed Smith

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