Madison - St. Clair Record

Sunday, November 17, 2019

Movie rental company loses tax refund appeal, failed to file claim in time

State Court

By John Breslin | Nov 5, 2019

Finances(1000)

MOUNT VERNON - Redbox, the rental movie company, is not eligible for a more than $1.3 million tax refund because it failed to file a claim in time, an appeals court has ruled.

The company had asked for the refund from its state tax, claiming the start of the tolling of the statute of limitations for a claim started within three years of the beginning of a second audit of the company.

But the Fifth District Appellate Court, with Presiding Justice David Overstreet authoring the judgment, and Justices Thomas Welch and James Moore concurring, found the movie rental company was given plenty of opportunity to file the claim long before it finally did so.

Redbox was appealing to the court over a decision by the Illinois Independent Tax Tribunal, which affirmed a finding by the Illinois Department of Revenue, to mostly deny the company's original claim that it wrongly overpaid more than $1.6 million. Of that amount, the department partly denied the claim, refusing $1.389 million.

The refund claim had its roots in the first of two audits of the company, the first of which related to a period from January 2007 to June 2010.  During that period, the company erroneously paid use tax for licensing agreements of $1.622 million, the appeals court noted.

Despite several waivers to extend the time for Redbox to file a refund claim to June 30, 2013, the company failed to do so, and did not until January 2016, the ruling states.

Redbox’s position was that a second audit by the department "tolled or restarted the limitation period to file a refund claim for use taxes paid over three years," Overstreet wrote.

The appeals court agreed with the the tribunal that Redbox’s "refund claim was untimely as to the disputed portion because Redbox had filed the claim more than three years after the erroneous tax payments in question."

Following the second audit, the department, in July 2016, did agree to pay back $4.5 million to Redbox for the licensing agreement overpay, plus $400,000 in interest, but minus $100,000 in other tax liabilities.

In connection with the first audit, Overstreet wrote, that "the law requires strict interpretation of refund statutes and strict interpretation of statute of limitations provisions.  We thus reject Redbox’s arguments on appeal."

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