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Hurricane Sandy Sparks Class Action Suit Over Sales Tax

  • Mar 20, 2015 | Gail Cole

 Hurricane Sandy: recovery takes time.

It’s been almost 2.5 years since Hurricane Sandy tore into the Eastern Seaboard, and dozens of communities are still struggling to recover. For many people affected by the storm, recovery includes litigation.

Last week, property owners in New Jersey and New York filed a class action suit against Selective Insurance of America and Selective Insurance Company of Southeast. The plaintiffs allege that the insurance companies “intentionally manipulated their internal insurance claims software (called ‘Xactimate’) in order to withhold millions of dollars of desperately needed relief, in the form of required sales tax, from their own insureds, despite falsely representing to each property owner on their claims estimate that they would receive all such funds.” They say the practice was widespread among insurance companies using Xactimate, a software program allegedly "incapable' of accounting for sales tax "at that time."

As a result of failing to pay for applicable sales tax, the property owners claim that “many policyholders have been left stranded without the ability [to] fully restore and return to their damaged homes.” Read the case file for additional details.

Charles Mathis IV, one of the attorneys involved in the case, said that in New Jersey, "for every $100,000 worth of storm damages, homeowners were shortchanged $7,000." Another attorney noted, "This was potentially hundreds of millions of dollars that was underpaid to Sandy Victims" (International Business Times).

Hurricane Sandy has sparked other litigation as well. Last week, on the same day that the class action suit described above was filed, the United States District Court of New Jersey issued orders for a temporary stay of two different Hurricane Sandy cases, pending settlement efforts.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.