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.com101. CA offered to pay the State $3,585,978.00 in resolution of all unclaimed propertyliabilities potentially owed to the State, said amount including monies demanded by the Statethat were not owed to it, but which CA agreed to pay to the State in the interest of expedientlyresolving all open issues relating to CA's VDA.102. Upon its offer of payment to the State in the amount of $3,585,978.00, andnumerous times previously, CA had fully performed its contractual obligations under the VDA.103. Despite CA's full performance under the VDA, the State failed and refused tofulfill its corresponding obligations under the VDA. In particular, the State did not execute theVDA Agreement as the parties had agreed, and did not waive the assessment of interest andpenalties as the parties had agreed. In addition, the State continued to demand more than theamount it knew it was entitled to receive.104. The State did not respond to CA's June 26, 2008 Proposal and, to date, hasrefused to accept CA's offer of payment in the amount of $3,585,978.00.Retaliatory Audit105. Instead of accepting CA's offered payment and executing the VDA Agreement,on or about July 17, 2008, the State sent CA a notice of audit ("Notice of Audit"). A true andaccurate copy of a letter from Mark Udinski to Nancy E. Cooper, dated July 17, 2008, is attachedhereto as Exhibit F.106. The Notice of Audit stated that the State intended to audit CA for the periods1981 through the present, a period greater than that covered by CA's VDA.107. The Notice of Audit did not void or even mention CA's VDA.108. Prior to July 17, 2008, the State repeatedly admitted in correspondence to CA thatCA's VDA was in full force and effect.- 58 –
From the state tax library of Reed Smith LLPwww.reedsmith.com/DEtaxfor other related documents, please email ksollie@reedsmith.com109. Prior to July 17, 2008, the State did not advise CA that CA was not in compliancewith the VDA.110. Prior to July 17, 2008, the State did not advise CA that the VDA had expired orwas void.111. Upon information and belief, the State initiated the audit as retaliation for CA'sunwillingness to pay more money to the State than it legally owed.112. The very threat of an audit, with the inherent additional drain on CA's time,resources and funds, was designed to intimidate CA into agreeing to pay the State a highernumber than the State was owed.113. The State's use of its audit powers to intimidate CA is contrary to its ownregulations and repugnant to public policy.114. Pursuant to the State's own regulations, the State could have accepted CA's offerof over $3,500,000, and conducted a complete audit at any time in the ensuing eighteen months.115. If such an audit disclosed that CA owed any additional funds to the State, CAwould have been required to pay those amounts, and would have been subject to interest,penalties and the nullification of its VDA.116. The State chose not to avail itself of this authorized avenue of relief in favor of itsattempt to intimidate CA with the hope of extracting a larger payment without the need for thesecond audit.117. In addition to violating its own VDA and regulations, the retaliatory audit is not inthe best interests of the State in that the second audit must find at least the amount originallyoffered by CA, plus additional amounts at least equal to the auditors' fees and the time value ofmoney, or else the State will actually have lost revenue.- 59 –
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CA, Inc.'s Answer and Counterclaim - Reed Smith

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