Former Bear Creek tax man sues over firing
Claims company owes more than $100 million in back sales taxes
A former Bear Creek Corp. tax manager has filed a lawsuit contendinghe was fired for trying to make the company comply with state tax laws.
Brook Buettner's complaint says the company owes more than $100 millionin state sales taxes, unpaid for more than a decade, despite his objections.
Bear Creek Corp. issued a statement denying the claims, saying the companyhas an enviable record of working with taxing authorities anda proactive policy of collecting and remitting sales and use taxes.
We plan to strenuously defend ourselves against these outlandishand unfair charges, the company said.
The Ashland resident was fired by the company Sept. 26. In his lawsuit,filed Thursday in Jackson County Court, he seeks $1.5 million in damagesfrom the Medford-based company, plus $5 million in punitive damages.
A mail-order company is required to collect and remit state sales taxesif it has a presence, or nexus, in a particular state.
Buettner contends visits by the company's traveling sales representativesconstitute a nexus. The complaint includes several internal memos datingback to 1983, including one from former controller Gil Nijsse to formerpresident John Holmes that says: I suspect that we have (internally)taken the position that we have no nexus until somebody nails us.
When Shaklee Corp. acquired Bear Creek from R.J. Reynolds in 1987, aninternal memo on the tax liability suggested the company then owed $16.2million for the previous six years.
The company has taken steps to deal with the issue and has settled withseveral states, Buettner says, but has paid only where state audits discloseda tax liability.
A spokesman for the Direct Marketing Association says what constitutesnexus remains uncertain.
The U.S. Supreme Court said it is a physical presence such as a storeor warehouse; it's not a catalog delivered through the mail, said Chet Dalzellof the trade association.
He said other case law says participation in a trade show, for instance,does not compel a company to collect sales tax from consumers in that state.
Dalzell said there's no case law or legislation addressing visits bytraveling sales reps.
The rules and the level of enforcement varies widely from state to state,he added.
The need to clarify nexus is important, he said. We'retrying to impress on states with our need to seek consistency in their ruleson activities and exemptions. Mail-order companies grapple with this everyday.
Buettner's suit also contends the company under-reported abandonedproperty returns on checks issued to a state's residents and not cashedfor three to five years. Buettner's complaint says the company reporteduncashed checks written to employees, but not those written to customers.
Buettner who has degrees in economics and law, worked for Bear Creek'sparent company, the Shaklee Corp., for several years before joining BearCreek in 1989.
The complaint says no reason was given for his dismissal. It allegeshe was fired in retaliation for his actions in a recent dispute about theaccuracy of computerized tax reports. The lawsuit says Buettner went overhis supervisor's head in an effort to gain support for his position.