Appeal from the Circuit Court of Cook County. No. 01 L 15540 Honorable Peter A. Flynn Judge Presiding
The opinion of the court was delivered by: Justice Tully
This case reaches us for resolution of certified questions pursuant to Supreme Court Rule 308 (155 Ill. 2d R. 308). Plaintiff, Inphoto Surveillance, Inc., filed a complaint against defendant, Crowe, Chizek and Company, LLP, alleging that defendant negligently rendered accounting advice regarding plaintiffs liability for sales taxes in the state of New York. Plaintiff alleged that as a result of the negligent advice it failed to collect sales tax from its customers in New York and incurred a substantial tax burden as a result. Defendant moved to dismiss the complaint alleging that the cause of action was barred by the statute of repose contained in section 13-214.2(b) of the Limitations Act (735 ILCS 5/13-214.2(b) (West 2002)). The trial court denied defendant's motion to dismiss and certified the following questions for interlocutory Review:
"Although the exception to the accountant's statute of repose provided for in 735 ILCS 5/13-214.2(b) refers to 'income tax assessments,' should §13-214.2 be construed to permit an action under the circumstances of this case, based on an assessment of sales taxes?"
"Although the exception to the accountant's statute of repose provided for in 735 ILCS 5/13-214.2(b) refers to extending the time to file an action against the accountant 'who prepared the tax return,' should §13-214.2 be construed so as to permit an action, under the circumstances of this case, against an accountant which advised its client (who followed the advice) that a tax return did not have to be prepared or filed?"
We granted leave to appeal these questions.
Plaintiff's complaint alleged the following. Plaintiff provides surveillance services in Illinois and other states for the insurance industry. Defendant provided accounting services and advice to plaintiff. In 1992 plaintiff began providing surveillance services to customers in New York and asked defendant whether it was required to collect sales tax from its clients and file sales tax returns with the state of New York. Defendant advised plaintiff that it did not need to register as a sales tax vendor or collect sales taxes. In reliance on defendant's advice, plaintiff did not collect sales taxes or remit sales taxes to New York.
In 1999 plaintiff entered into a voluntary disclosure program with the New York State Department of Taxation. As a condition of acceptance into the program, plaintiff paid approximately $500,000 assessed as unpaid sales tax. Plaintiff alleged that defendant's advice regarding the payment of sales taxes to New York was wrong and that it was at all times required to collect and pay sales taxes. Plaintiff alleged that defendant's advice breached the standard of care and that it was injured because absent the erroneous tax advice it would have collected the required sales taxes from its customers. Plaintiff's complaint contained a second count entitled "Implied Indemnity." Plaintiff alleged that because it relied on defendant's advice regarding the collection of sales taxes, defendant was required to indemnify it for the back taxes it paid to the state of New York.
Defendant moved to dismiss plaintiff's complaint pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West 2002)). Defendant alleged that the complaint was barred by the two-year statute of limitations contained in section 13-214.2(a) of the Limitations Act. Defendant alternatively alleged that the complaint was barred by the five-year statute of repose contained in section 13-214.2(b) of the Limitations Act. On July 12, 2002, the trial court denied defendant's motion to dismiss "for the reasons stated in open court." However, there is no report of proceedings, or bystanders report in the record which reflects the reasons given by the trial court for its denial of the motion to dismiss. Defendant subsequently moved to reconsider the trial court's ruling or in the alternative certify the question for immediate interlocutory appeal. The trial court denied defendant's motion to reconsider and granted its motion to certify the question for appeal. In its written order the trial court held that it "would make no sense to limit the exception to income, as opposed to sales, tax assessment." The trial court also certified the two questions for appeal set forth above. We subsequently granted defendant petition for leave to appeal.
Our disposition of this appeal depends on an interpretation of the statute of repose applicable to accountants. Section 13-214.2 of the Limitations Act provides, in pertinent part:
"(a) Actions based upon tort, contract or otherwise against any person, partnership or corporation registered pursuant to the Illinois Public Accounting Act, as amended, or any of its employees, partners, members, officers or shareholders, for an act or omission in the performance of professional services shall be commenced within 2 years from the time ...