Opinion ID: 2510469
Heading Depth: 1
Heading Rank: 12

Heading: The Laraway good cause for dismissal analysis

Text: Finally, petitioners and amicus curiae Nevada Taxpayers' Association assert that, even if tax matters are not obviously barred from being raised in false claims actions, the FCA directly conflicts with the protective purposes behind the statutory tax scheme so that the two schemes cannot coexist peacefully. The Attorney General and IGT argue, and amicus curiae Nevada Taxpayers' Association suggests, that allowing FCA actions based on tax matters will result in the creation of two separate, inconsistently and disparately treated classes of taxpayers. Such a result, they argue, implicates taxpayers' equal protection rights, which require the uniform and consistent interpretation and application of tax laws under the Taxpayers' Bill of Rights. [87] [W]hen separate [state] statutes are potentially conflicting, [this court] attempt[s] to construe both statutes in a manner to avoid conflict and promote harmony. [88] Because we conclude that the two statutory schemes' collection provisions were intended to primarily encompass different types of situationsthose which require the specialized knowledge and function of the tax department to resolve legal disputes and those in which truly fraudulent conduct is discovered by private persons, or whistleblowerswe disagree that FCA actions necessarily conflict with or impermissibly interfere with taxpayer protections so as to require a ban on all false claims actions based on tax matters. We do, however, recognize that in some instances the need for consistent interpretation and application of the tax statutes may properly form a basis for good cause dismissal. Reverse false claims are intended to apply to situations in which it is discovered that a person knowingly exploited a false record to conceal, avoid or decrease an obligation to pay. [89] A person acts `knowingly' with respect to information if he: (a) Has knowledge of the information; (b) Acts in deliberate ignorance of whether the information is true or false; or (c) Acts in reckless disregard of the truth or falsity of the information. [90] So as to avoid punishing `honest mistakes or incorrect claims submitted through mere negligence,' [91] the requisite scienter has been defined as `the knowing presentation of what is known to be false.' [92] And known to be false does not mean either [t]o take advantage of a disputed legal question, [93] or `scientifically untrue; it means a lie.' [94] In many cases, allegations that a taxpayer has failed to pay the correct amount of taxes due under the revenue statutes invoke a good-faith dispute regarding the application of the law to particular factual circumstances; in other words, the allegations amount to no more than mere accusations that the taxpayer has taken advantage of a disputed legal question. [95] To resolve such allegations, the revenue statutes' application to the matter's factual circumstances must be evaluated. But, as this court has previously pointed out, the determinations of fact-based legal issues under the tax statutes should not be made by the courts; rather, those determinations are best left to the Department of Taxation, which can utilize its specialized skill and knowledge to inquire into the facts of the case. [96] Further, we have repeatedly recognized the authority of agencies, like the tax department and Tax Commission, to interpret the language of a statute that they are charged with administering; as long as that interpretation is reasonably consistent with the language of the statute, it is entitled to deference in the courts. [97] Thus, a claim that cannot be resolved without evaluating the facts of a particular case under the revenue statutesfor example, when there exists a legitimate dispute on whether taxes are actually owed under Title 32does not fall within the FCA's definition of fraudulent acts or its purpose to expose specific instances in which a person lies to the government, and it is not properly resolved by the courts in the first instance. Instead, the FCA is meant to encourage private persons to reveal instances when a person has cheated or attempts to cheat the government by submitting documents containing manufactured or omitted facts or data. For example, an FCA claim might properly be maintained on allegations that state money was fraudulently withheld by a company that keeps two sets of books reporting the same transactionsone that accurately reflects the sales' gross receipts and one that does notand then underreports its state sales tax liabilities based on the untrue data. While both types of allegations, those involving fact-based legal issues and those involving the filing of fraudulent forms, are based on an underlying tax statute, resolution of the former type requires the kind of evaluation that is entrusted to the tax department's expertise and, thus, is improperly maintained under the FCA. The latter type is perhaps most likely to be discovered by a private whistleblower, does not require the tax department's expertise, and is properly resolved by a court under the FCA. When the tax department's expertise is not implicated in a false claims action, an argument that the claim is improper under the FCA because it involves a tax matter must fail and cannot signify a legitimate government purpose for good cause dismissal. But if the Attorney General moves to dismiss an action because, based on the allegations in the complaint and information relevant thereto, it appears that the action presents issues better suited to resolution through the tax department's specialized knowledge, the Attorney General has asserted good cause for dismissal, and absent a showing of improper conduct, the district court is obligated to dismiss the action. In this manner, taxpayers' rights under the revenue statutes, including the right to a uniform and consistent application of the statutes, [98] will be preserved. [99]