In response to this payment (again, according to the allegations of the Complaint) Delaware initiated an audit of the company, going back to 1981. As a result of that audit, Delaware demanded an additional $300k from Select. The lawsuit raises a number of challenges to the Division of Revenue's normal audit practices including:
- the use of estimation prior to the enactment of Delaware's statute authorizing estimation;
- the alleged use of "arbitrary and capricious" estimation methods;
- the inclusion of non-dormant property in Delaware's estimation procedures; and
- Delaware's claimed disregard of the Texas v. New Jersey priority rules.
* Note that the VDA program described in the complaint appears to be the Division of Revenue's VDA program, not the temporary VDA program currently being offered by the Delware Secretary of State.