Court filing
Complaint — Alliance Collection Agencies, Inc. v. United States of America (Dkt. 1, W.D. Wis.)
Summary
A complaint by Alliance Collection Agencies, Inc. and Healthcare Business Services, Inc. against the United States, Case No. 3:26-cv-1009, in the U.S. District Court for the Western District of Wisconsin, filed October 8, 2026 as Document #: 1. The plaintiffs seek refunds of employee retention credits for 2021 quarters, describing the credit as 70 percent of qualified wages up to $7,000 per employee per quarter. They state that the IRS disallowed their refund claims in Letters 105C dated between August 19, 2024 and April 10, 2026, and that the suit is timely under IRC Section 6532(a)(1). They ask for judgment of $1,127,672.90 for Alliance and $209,632.92 for HBS, with interest.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Filed October 8, 2026 in Alliance Collection Agencies, Inc. v. United States of America; one of 1 filings from this case.
Record facts
| Court | U.S. District Court for the Western District of Wisconsin |
|---|---|
| Filed | 2026-10-08 |
Cite this document
“Complaint — Alliance Collection Agencies, Inc. v. United States of America (Dkt. 1, W.D. Wis.).”
U.S. District Court for the Western District of Wisconsin, No. 3:26-cv-01009, Doc. 1, filed 2026-10-08. Archived at Pandemic Darlings, https://pandemicdarlings.com/court-filings/full-docket-united-states-of-america-wiwd-74935752/2026-10-08-gov-uscourts-wiwd-74935752-1-0-doc-1/
, SHA-256 ebdaa6bfc6b916565f41c3a1e896cf2e9adaef10961bb49ee6255fa89d0dd3b3.Full text
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 1 of 22
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WISCONSIN
ALLIANCE COLLECTION
AGENCIES, INC. and
HEALTHCARE BUSINESS
SERVICES, INC.
Plaintiffs, Case No. 3:26-cv-1009
v. Hon.
UNITED STATES OF AMERICA
Defendant.
D. Andrew Portinga (P55804)
Bryce C. Akins (P88780)
Amanda L. Rauh-Bieri (P83615)
MILLER JOHNSON
Attorneys for Plaintiffs
45 Ottawa Ave. SW, Suite 1100
Grand Rapids, MI 49503
(616) 831-1700
portingaa@millerjohnson.com
akinsb@millerjohnson.com
rauhbieria@millerjohnson.com
Complaint
Alliance Collection Agencies, Inc. (“Alliance”) and Healthcare Business
Services, Inc. (“HBS”) (collectively, “Plaintiffs”) state the following Complaint against
the United States of America (“Defendant”):
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 2 of 22
Overview
1. This is a suit for a tax refund. Plaintiffs are entitled to, but did not
receive, refunds due to employee retention tax credits. Alliance is entitled to such
credits and refunds for the first, second and third quarters of 2021, and HBS is
entitled to such credits and refunds for the third quarter of 2021.
The Parties, Jurisdiction, and Venue
2. Alliance is a third-party debt collection agency with its principal place
of business in Marshfield, Wisconsin.
3. HBS is a first-party revenue cycle management company with its
principal place of business in Marshfield, Wisconsin.
4. Plaintiffs specialize in revenue cycle management and in recovery of
past-due accounts for healthcare providers (e.g., hospitals, physicians, and medical
systems).
5. This Court has jurisdiction over this matter because these claims are
against the United States of America and brought under federal law. This Court
specifically has jurisdiction pursuant to 28 U.S.C. §§ 1331 (civil action arising under
the Constitution, laws, or treaties of the United States), 1340 (civil action arising
under Act of Congress providing for internal revenue), and 1346(a)(1) (civil action
against United States for recovery of tax or other sum wrongfully collected under
internal revenue laws); and 26 U.S.C. § 7422 (civil action for refund).
6. Venue is proper in the Western District of Wisconsin pursuant to 28
U.S.C. §§ 1391 and 1402(a), as each of the Plaintiffs is a for-profit corporation with
its principal place of business in Marshfield, Wisconsin, within this District.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 3 of 22
7. Plaintiffs have satisfied all administrative and jurisdictional
requirements for filing this lawsuit.
8. Alliance timely filed a claim for refund (Form 941-X) for the first quarter
of 2021.
9. Alliance timely filed a claim for refund (Form 941-X) for the second
quarter of 2021.
10. Alliance timely filed a claim for refund (Form 941-X) for the third
quarter of 2021.
11. HBS timely filed a claim for refund (Form 941-X) for the third quarter
of 2021.
12. In a Letter 105C dated August 19, 2024, Defendant disallowed Alliance’s
claim for refund for the first quarter of 2021.
13. In a Letter 105C dated April 10, 2026, Defendant disallowed Alliance’s
claim for refund for the second quarter of 2021.
14. In a Letter 105C dated October 17, 2024, but which IRS transcripts
indicate was not mailed until October 28, 2024, Defendant disallowed Alliance’s claim
for refund for the third quarter of 2021.
15. In a Letter 105C dated December 10, 2024, Defendant disallowed HBS’s
claim for refund for the third quarter of 2021.
16. Pursuant to Internal Revenue Code (IRC) Section 6532(a)(1), a suit for
refund must be filed within two years of the date a claim for refund is disallowed,
unless the parties agree to an extension of that limitations period.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 4 of 22
17. This suit is within two years of the date the Internal Revenue Service
(“IRS”) disallowed Plaintiffs’ claims for refund for the second quarter of 2021 and the
third quarter of 2021.
18. Defendant and Alliance signed Form 907 (Exhibit 1) in which they
stipulated to the extension of the time for filing a suit for refund for the first quarter
of 2021 until August 19, 2027.
19. This suit is, therefore, timely with respect to all of the Plaintiffs’ claims
for refund for all of the stated quarters.
20. Alliance timely requested an Appeals Conference with respect to the
IRS’s disallowances of Alliance’s claims for refunds for the first quarter of 2021, the
second quarter of 2021, and the third quarter of 2021.
21. HBS timely requested an Appeals Conference with respect to the IRS’s
disallowance of HBS’s claim for refund for the third quarter of 2021.
22. The IRS, however, granted an Appeals Conference only to Alliance and
only for the first quarter of 2021, and recently stated that it could not locate Alliance’s
requests for an Appeals Conference for the second quarter of 2021 or the third quarter
of 2021.
23. With respect to the second quarter of 2021 and the third quarter of 2021,
the IRS’s failure to grant Alliance or HBS an Appeals Conference and the IRS’s loss
of Alliance’s requests for Appeals Conferences have forced Plaintiffs to commence this
action.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 5 of 22
24. Defendant can be served through the United States Attorney for the
Western District of Wisconsin.
The Employee Retention Credit
25. The Employee Retention Credit (“ERC”) was enacted under Section
2301 of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), Pub.
L. No. 116-136, 134 Stat. 281 (2020), to encourage businesses to retain employees
during the economic disruptions caused by the COVID-19 pandemic.
26. The ERC was subsequently amended, extended, and modified for the
periods in question (among others) by Sections 206 and 207 of the Taxpayer Certainty
and Disaster Tax Relief Act of 2020 (enacted as Division EE of the Consolidated
Appropriations Act, 2021, Pub. L. No. 116-260), and Section 9651 of the American
Rescue Plan Act of 2021 (“ARPA”), Pub. L. No. 117-2 (codified at I.R.C. § 3134).
27. For the first, second and third quarters of 2021, an employer is entitled
to a refundable tax credit (against the employer’s share of Medicare or Social Security
taxes) equal to 70 percent of qualified wages paid to each employee, up to a maximum
credit of $7,000 per employee per quarter.
28. Under I.R.C. § 3134, an employer qualifies for the ERC in 2021 if it
carried on a trade or business during the calendar quarter and satisfied one of two
tests (which are described below): (i) the “Gross Receipts Test” or (ii) the “Suspension
Test.”
29. For each of the periods in question, an employer satisfied the Gross
Receipts Test if the employer experienced a significant decline in gross receipts,
defined as gross receipts for the calendar quarter that were less than 80 percent of
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 6 of 22
the gross receipts for the same calendar quarter in calendar year 2019 (or met the
alternative safe harbor look-back quarter election).
30. For each of the periods in question, an employer satisfied the Suspension
Test if the employer’s trade or business operations were fully or partially suspended
due to applicable government orders, related to COVID-19, that limited commerce,
travel, or group meetings.
31. A reduction in gross receipts for 2021 due to COVID-19 orders was
relevant to both the Gross Receipts Test and the Suspension Test.
Factual Background
32. For purposes of the Gross Receipts Test for the periods in question,
Alliance and HBS were aggregated entities because of common ownership. That is,
the Gross Receipts Test was to be applied based on their combined gross receipts.
33. Alliance and HBS’s combined gross receipts were down for the quarters
in question (when compared to the corresponding quarters in 2019) as follows:
Quarter in 2021 Percentage Reduction
1st Quarter 21.21%
2nd Quarter 27.39%
3rd Quarter 29.77%
34. Thus, Alliance and HBS satisfied the primary Gross Receipts Test for
the first, second and third quarters of 2021.
35. For the first and second quarters of 2021, the IRS agreed with and
allowed HBS’s ERC claims for refund, which were based solely on Alliance and HBS
satisfying the Gross Receipts Test on an aggregated basis.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 7 of 22
36. The Gross Receipts Test for Alliance and HBS for the first and second
quarters of 2021 was the same test. That is, if HBS satisfied it, Alliance satisfied it.
37. There is an alternative Gross Receipts Test. In IRS Notices 2021-23 and
2021-49, which are binding on the IRS (but not on Plaintiffs), the IRS provided for an
alternative test, the “Alternative Quarter Election Test,” pursuant to which an
employer could satisfy the Gross Receipts Test by comparing the quarter prior to the
quarter in question to the corresponding 2019 quarter. For example, with respect to
the first quarter of 2021, Plaintiffs would be allowed to elect to compare their fourth
quarter of 2020 receipts to their gross receipts for the fourth quarter of 2019.
38. Alliance and HBS, on an aggregated basis, satisfied the Alternative
Quarter Election Test for the first quarter of 2021 (a 29.2% reduction in gross
receipts), the second quarter of 2021 (a 21.21% reduction in gross receipts), and the
third quarter of 2021 (a 27.39% reduction in gross receipts).
Effect of Reduction in Gross Receipts on the Suspension Test
39. For the periods in question, a reduction in gross receipts may also be
relevant to the determination of whether an employer satisfied the Suspension Test.
40. In IRS Notice 2021-20, which is binding on the IRS (but not on
Plaintiffs), the IRS stated that a suspension of operations (a “Suspension”) under the
Suspension Test must have had more than a nominal effect on the employer’s
business overall, or on a significant activity of the employer.
41. In Notice 2021-20 (which is binding on the IRS but not on Plaintiffs), the
IRS conceded that a 10% reduction in an employer’s overall gross receipts or gross
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 8 of 22
receipts from a significant activity, if due to a governmental order, was more than a
nominal effect for Suspension Test purposes.
42. Each of Alliance and HBS suffered, overall, more than a 10% reduction
in gross receipts due to governmental orders and, therefore, satisfied the IRS
Suspension Test requirement that governmental orders have more than a nominal
effect.
43. Additionally, in Notice 2021-20, the IRS conceded that if one member of
an aggregated group suffered a full or partial Suspension, all members of the
aggregated group are deemed to have suffered a Suspension.
44. Each of Alliance and HBS suffered a full or partial Suspension.
45. Alliance derives gross receipts from fees it receives for collecting
consumer medical debt for services provided by its healthcare clients. Alliance’s core
business before, during and after COVID was and is the collection of medical debt
placed with Alliance for collection.
46. Alliance’s core business was significantly harmed during COVID.
Alliance’s fees from this business were down during the quarters in question by far
more than the percentage required to satisfy the IRS’s more-than-nominal-effect
threshold.
47. Pre-COVID, Alliance also earned substantial revenue from managing
collection litigation matters. During 2020 and 2021, Alliance was forced to entirely
shut down that portion of its business, which resulted in a 100% reduction in gross
receipts from that business for the periods in question.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 9 of 22
48. Those numbers satisfy the IRS requirement of the Suspension Test that
the government orders must have had more than a nominal effect.
The Applicable Orders
49. As stated previously, Plaintiffs were aggregated for ERC purposes and,
therefore, a Suspension suffered by either Plaintiff is deemed to have been suffered
by both Plaintiffs.
50. Plaintiffs work closely with their healthcare business partners.
51. Plaintiffs’ businesses are essentially tied to the businesses of their
healthcare business partners.
52. For that reason, COVID-related governmental orders that affected
Plaintiffs’ business partners affected Plaintiffs.
53. Although headquartered in Wisconsin, Plaintiffs do business in all 50
states.
54. For that reason, governmental orders from Wisconsin and other states
affected Plaintiffs.
55. During the first three quarters of 2021, Plaintiffs’ business operations
were subject to a continuing series of federal, state and local COVID-19 public‑health
and workplace‑safety orders issued by multiple agencies (the “Government Orders”).
56. The Government Orders imposed limitations on Plaintiffs’ operations
and those of their business partners through multiple mechanisms, including:
(i) requirements that caused Plaintiffs to send employees home; (ii) mandatory
workplace-safety protocols that reduced capacity and operational efficiency; (iii) mass
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 10 of 22
employee absenteeism that was essentially authorized by law; and (iv) mandatory
cancellation or severe limitation of in-person and patient meetings (which reduced
business and revenue).
57. Wisconsin businesses, and businesses in other states in which Plaintiffs
operated, were also investigated and fined for violations of OSHA rules and the OSHA
General Duty Clause.
58. The IRS has acknowledged that state government enforcement of OSHA
guidelines or rules can rise to the level of an applicable order for purposes of the
Suspension Test. See IRS Office of Chief Counsel, General Legal Advice
Memorandum 2023‑007.
59. A non-exhaustive list of Wisconsin and federal COVID-era statutes and
orders that combined to cause operational Suspensions for Plaintiffs is below:
Jurisdiction Order Citation Summary
State of Executive Order #72 – Declared the initial statewide public health
Wisconsin Declaring a Public Health emergency and designated DHS as lead
Emergency (March 12, 2020); agency, triggering emergency powers and
expired May 11, 2020 (60-day enabling all subsequent emergency orders.
statutory limit under Wis.
Stat. § 323.10)
State of Emergency Order #12 – Required all individuals to stay at home
Wisconsin Safer at Home Order (March except for enumerated essential activities;
(DHS) 24, 2020; effective March 25, ordered all non-essential businesses to cease
2020); superseded by operations; and imposed Social Distancing
Emergency Order #28 on Requirements on all essential businesses.
April 24, 2020 Enforceable by up to 30 days' imprisonment
or a $250 fine.
Caused structural operational changes,
including transition to remote work,
cessation of in-person client services, and
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 11 of 22
modification of business workflows from
which Plaintiffs have not fully recovered.
State of Executive Order #82 – Required all individuals age 5 and older to
Wisconsin Declaring a Public Health wear face coverings in all indoor public
Emergency (July 30, 2020) spaces and enclosed spaces open to the public
when another person outside the individual’s
household was present. Enforceable by civil
forfeiture of up to $200 under Wis. Stat. §
323.28.
State of Executive Order #90 Extended the statewide public health
Wisconsin (September 22, 2020), emergency and face covering mandates
Executive Order #95 through successive 60-day declarations.
(November 20, 2020) –
Successive Emergency
Declarations and Renewed
Face Covering Mandates
Emergency Order #3 – Limited all indoor public gatherings to no
State of Limiting Public Gatherings more than 25% of the established occupancy
Wisconsin (issued October 6, 2020; limit for any room or building open to the
(DHS) effective October 8, 2020; public. Applied to all businesses accessible to
expired November 6, 2020). the public, including retail stores,
Issued under authority of restaurants, and office lobbies. Spaces
Wis. Stat. § 252.02(3) without an occupancy limit were limited to
10 persons. Enforceable by civil forfeiture
under Wis. Stat. § 252.25.
The order compelled businesses to
restructure physical layouts, reduce capacity,
and implement occupancy monitoring
systems.
State of Executive Order #104 – Declared a new state of emergency and
Wisconsin Declaring a State of public health emergency under Wisconsin
Emergency and Public law, triggering emergency powers and
Health Emergency (January related executive actions.
19, 2021); revoked by 2021
Senate Joint Resolution 3 on
February 4, 2021
State of Emergency Order #1 – Face Required all individuals aged 5 and older to
Wisconsin Coverings (issued January wear face coverings in all indoor public
19, 2021, pursuant to spaces and enclosed spaces when another
Executive Order #104); person not part of the individual’s household
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 12 of 22
superseded by new was present. Enforceable by civil forfeiture of
emergency order on up to $200.
February 4, 2021 Caused work disruptions and reduced service
capacity.
State of Executive Order #105 – Governor Evers issued EO #105 declaring a
Wisconsin Declaring a State of new public health emergency and a renewed
Emergency and Public Emergency Order #1 requiring face coverings
Health Emergency (February statewide.
4, 2021); renewed Emergency
Order #1 – Face Coverings
(February 4, 2021)
State of Wis. Stat. § 252.02 – Granted DHS broad, standing authority to
Wisconsin Department of Health “authorize and implement all emergency
(Statutory Services Powers to Control measures necessary to control communicable
Authority) Communicable Diseases diseases” (§ 252.02(6)) and to close
(permanent statute; establishments (§ 252.02(3)).
authority independent of any
emergency declaration under This permanent statutory authority provided
Wis. Stat. § 323.10) continuing legal basis for DHS measures to
control communicable diseases and restrict
gatherings.
State of Emergency Order #16 – These orders affected healthcare suppliers’
Wisconsin Department of Safety and operations and staffing models, thereby
(DHS/DSPS) Professional Services impacting the volume and continuity of
Credentialing (March 27, revenue cycle data flowing to Plaintiffs.
2020), Emergency Order #20
(April 3, 2020) – DSPS
credentialing of health care
providers; Emergency Order
#21 (April 3, 2020) – DHS
administrative rule
suspensions for EMS,
nursing homes, hospices, and
home health agencies.
Federal – OSHA COVID-19 Imposed a binding emergency temporary
OSHA Healthcare; Emergency standard requiring healthcare employers to
(Mandatory Temporary Standard (29 implement comprehensive COVID‑19
Standard) C.F.R. Part 1910, Subpart U, protocols, including patient screening and
§ 1910.502) (effective June triage, transmission‑based precautions,
21, 2021) mandatory masking or respirators, physical
distancing, physical barriers, enhanced
cleaning and disinfection, ventilation
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 13 of 22
controls, employee health screening,
training, and detailed
recordkeeping/reporting.
These OSHA guidelines were adopted and
enforced in many states in which Plaintiffs
operate (including enforcements in
Wisconsin), which the IRS has agreed causes
these rules to constitute applicable orders for
ERC purposes.
Federal – Interim Final Rule (CMS- Required long‑term care (LTC) facilities and
CMS 3414-IFC) – The CMS Long- ICF‑IID providers to implement extensive
(Mandatory Term Care Rule Window; weekly reporting through the CDC’s NHSN
Standard) COVID-19 Vaccine system, including COVID‑19 vaccination
Immunization Requirements status of residents and staff, doses
for Residents and Staff administered, adverse events, and
(published May 11, 2021; therapeutics data, with noncompliance
mandatory reporting began triggering escalating financial penalties.
June 13, 2021; terminated
May 11, 2023, with the end
of the federal COVID-19
Public Health Emergency)
Federal – American Rescue Plan Act of Imposed multiple mandatory federal
Congress 2021, Pub. L. 117-2 requirements on healthcare providers,
(Mandatory including:
Statute)
COBRA Premium Assistance (§9501)
Required full subsidization of COBRA
coverage with retroactive eligibility
determinations, necessitating
extensive historical data reviews,
manual account identification,
removal from automated collections
workflows, and suspension or
modification of normal collection
activities.
Medicaid Coverage Mandate (§9811)
and CHIP (§9821)
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 14 of 22
Required immediate coverage of
COVID-19 vaccines, administration,
and treatment with no cost sharing,
coupled with real-time tracking,
reporting, and system integration
requirements tied to federal funding.
ARPA mandates required healthcare
suppliers to rapidly reallocate internal
IT infrastructure and administrative
resources to compliance, disrupting
normal billing workflows and reducing
data and revenue flow to Plaintiffs.
For example, healthcare system
clients (the “supplier” of accounts
receivable and billing work) were
required to reprogram billing systems,
conduct manual account audits, and
alter or suspend standard collections
processes to comply with COBRA
premium subsidy requirements and
expanded Medicaid and CHIP
coverage. As a result, revenue cycle
workflows for affected account
categories were disrupted, delayed, or
temporarily suspended, reducing the
volume and continuity of billing data
and revenue flows to Plaintiffs.
State of Emergency Order #1 (March Prohibited mass gatherings, closed schools,
Wisconsin 13, 2020) – Statewide school and closed bars/restaurants except for
(DHS) closure; Emergency Order #4 takeout/delivery, effective March 17–18,
(March 16, 2020) – Ban on 2020. Superseded by EMO #12 (Safer at
gatherings of 50+ people; Home).
Emergency Order #5 (March
17, 2020) – Ban on These orders established the initial
gatherings of 10+ people and operational restrictions that affected
bar/restaurant closures; healthcare clients’ patient volumes and in-
Emergency Order #8 (March person operations, reducing billing workflow
20, 2020) – Updated mass to Plaintiffs.
gathering ban.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 15 of 22
60. Even though some of the above-listed statutes or orders were lifted or
terminated during or prior to the periods in question, they had a lingering effect, and
Plaintiffs continued to suffer Suspensions during the periods in question due to those
statutes or orders.
61. As stated earlier, however, Plaintiffs are licensed and operate in all 50
states. As a result, states other than Wisconsin issued statutes and orders that
affected Plaintiffs.
62. Plaintiffs are healthcare collection and revenue cycle management
companies. Many states imposed severe restrictions on activities of companies like
Plaintiffs.
63. For example:
i. Section 207 of the Washington D.C. Emergency Act amended D.C.
Code § 28-3814 to add a number of restrictions related to the
collection of debt during the pandemic;
ii. Massachusetts adopted sweeping prohibitions on debt collection
practices during COVID (see 940 CMR 35:00);
iii. Nevada closed all Nevada collection agencies and mandated out-
of-state collection agencies to cease collection efforts dealing with
Nevada residents;
iv. Louisiana effectively banned the use of phone calls to collect debt
(see LPSC General Order R-29617); and
v. North Carolina ordered all collection agencies to allow consumers
certain payment deferrals (in order to comply with North
Carolina General Statute 58-2-46, NC’s State of Disaster statute).
64. Some states imposed bans on medical procedures and visits that
resulted in a reduction in revenue for both the medical providers and Plaintiffs.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 16 of 22
65. Physician offices in many states were subject to strict operational
mandates, licensure adjustments, mandated closures for non-urgent care, and
limitations on patient visits.
66. Some states adopted, as state law, and enforced federal OSHA rules.
67. Michigan, for example, incorporated the OSHA General Duty Clause
into its MIOSHA General Duty Clause, which Michigan used to investigate and fine
many businesses for not complying with COVID standards.
68. Although Plaintiffs are headquartered in Marshfield, Wisconsin, they
also operate in Dane County and Milwaukee County, Wisconsin’s most populous
counties.
69. Those two counties issued orders mandating: (i) hygiene and cleaning
policies, (ii) reduced office presence, (iii) remote work, and (iv) other operational
restrictions. These orders caused reduced capacity for Plaintiffs’ clients and reduced
business for Plaintiffs.
70. The panoply of orders coming from virtually every state and many
municipalities combined to deaden Plaintiffs’ historical business activities.
71. Despite having to continue to rent their office spaces, Plaintiffs were
forced to transition from in-office operations to remote operations, which increased
their expenses and decreased their capacity and net revenue.
72. Plaintiffs had to scramble to equip their remote workers with laptops,
printers, copiers, scanners and other equipment to use at their homes, thus
increasing their expenses and reducing their net profit.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 17 of 22
73. Worker productivity suffered, in part because home offices were
inadequate and in part because Plaintiffs lost the ability to continuously monitor
their workers.
74. IT and security costs increased dramatically because of the switch to
remote work.
75. Plaintiffs’ net profits never fully recovered and are still well below what
they would have been absent the COVID-era regulations.
Count I — Claim for Refund of Taxes-Alliance
76. Plaintiffs incorporate the foregoing paragraphs as if fully set forth
herein.
77. For the quarters in question, Alliance timely filed claims for refund due
to Employee Retention Credits in the following amounts:
Quarter Amount of Claim
1st Quarter $405,978.23
2nd Quarter $312,188.24
3rd Quarter $409,506.43
78. Alliance timely paid all employment taxes reported as paid on its claims
for refund for the first, second and third quarters of 2021.
79. Alliance timely filed this suit for refund for its first, second and third
quarter overpayments of employment taxes.
80. Alliance is entitled to employment tax refunds from Defendant for the
quarters in question in the following amounts:
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 18 of 22
Quarter Amount of Refund Due Alliance
1st Quarter $405,978.23
2nd Quarter $312,188.24
3rd Quarter $409,506.43
Count II — Claim for Refund of Taxes—HBS
81. Plaintiffs incorporate the foregoing paragraphs as if fully set forth
herein.
82. For the third quarter of 2021, HBS timely filed a claim for refund due to
Employee Retention Credits in the amount of $209,632.92.
83. HBS timely paid all employment taxes reported as paid on its claim for
refund for the third quarter of 2021.
84. HBS timely filed this suit for refund for its third quarter of 2021
overpayment of employment taxes.
85. HBS is entitled to an employment tax refund from Defendant for the
third quarter of 2021 in the amount of $209,632.92.
Count III — Claim for Interest—Both Alliance and HBS
86. Plaintiffs incorporate the foregoing paragraphs as if fully set forth
herein.
87. Pursuant to I.R.C. § 6611, Plaintiffs are entitled to compound interest,
at the overpayment rate established under IRC Section 6621, on the unpaid amount
of any tax refund that is due to Plaintiffs.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 19 of 22
88. As of the date of this filing, Plaintiffs have not received any part of the
refunds (or interest on the refunds) that are due Plaintiffs, as outlined in Counts I
and II.
89. Accordingly, Plaintiffs are entitled to interest, under IRC § 6611, on the
unpaid amount of the refunds of tax and interest that are due to Plaintiffs until
Defendant pays all of such refunds and corresponding interest.
Count IV — Claim for Attorneys’ Fees—Both Alliance and HBS
90. Plaintiffs incorporate the foregoing paragraphs as if fully set forth
herein.
91. Alliance timely filed a claim for refund (Form 941-X) for the first quarter
of 2021.
92. Alliance timely filed a claim for refund (Form 941-X) for the second
quarter of 2021.
93. Alliance timely filed a claim for refund (Form 941-X) for the third
quarter of 2021.
94. HBS timely filed a claim for refund (Form 941-X) for the third quarter
of 2021.
95. In a Letter 105C dated August 19, 2024, Defendant disallowed Alliance’s
claim for refund for the first quarter of 2021.
96. In a Letter 105C dated April 10, 2026, Defendant disallowed Alliance’s
claim for refund for the second quarter of 2021.
97. In a Letter 105C dated October 17, 2024, Defendant disallowed
Alliance’s claim for refund for the third quarter of 2021.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 20 of 22
98. In a Letter 105C dated December 10, 2024, Defendant disallowed HBS’s
claim for refund for the third quarter of 2021.
99. In each Letter 105C, Defendant explained that Plaintiffs were entitled
to IRS Appeals Office consideration of the disallowances of Plaintiffs’ claims for
refund.
100. Plaintiffs timely filed requests for IRS Appeals Office consideration of
each disallowance of their claims for refund.
101. The IRS granted an Appeals Conference for Alliance’s claim for refund
for the first quarter of 2021.
102. The IRS did not grant an Appeals Conference with respect to Alliance’s
or HBS’s other claims for refund that are at issue here, and the IRS recently indicated
that it could not locate Alliance’s request for Appeals consideration for the second or
third quarters.
103. As a result, the IRS would not consider signing a Form 907 for either of
those quarters and stipulating to the extension of the two-year limitations period for
filing a suit for refund.
104. This case involves, among other things, a mechanical application of the
Gross Receipts Test and should have been resolved administratively in the IRS.
105. Due to the IRS’s negligence and unreasonableness, however, it was
necessary to file this suit.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 21 of 22
106. Plaintiffs properly exhausted all administrative remedies, but this
litigation resulted because of the IRS’s mishandling of the administrative process,
loss of requests for Appeals conferences, and failure to grant Appeals conferences.
107. Pursuant to I.R.C. § 7430, if either Plaintiff prevails, that Plaintiff may
recover from Defendant reasonable litigation and administrative attorneys’ fees and
costs.
108. Accordingly, Plaintiffs request an award of costs and attorneys' fees
incurred as a result of the IRS’s actions and omissions in this matter, including, but
not limited to, all costs and attorneys’ fees awardable under IRC § 7430.
Prayer for Relief
WHEREFORE, Plaintiffs respectfully request that this Court:
(A) Enter judgment for Alliance in the amount of $1,127,672.90;
(B) Enter judgment for HBS in the amount of $209,632.92;
(C) Enter judgment for each Plaintiff for interest on such amounts as are
owed to them, including, but not limited to, all interest due under IRC §6611;
(D) Enter judgment for each Plaintiff for reasonable attorneys’ fees and
costs, including, but not limited to, all litigation and administrative fees and costs
awardable under IRC § 7430; and
(E) Award to each Plaintiff all other relief to which such Plaintiff is entitled
at law or in equity.
Case: 3:26-cv-01009-wmc Document #: 1 Filed: 10/08/26 Page 22 of 22
DEMAND FOR JURY TRIAL
Pursuant to Federal Rule of Civil Procedure 38(b) and 28 U.S.C. § 2402,
Plaintiffs hereby demand a trial by jury on all issues so triable as a matter of right.
MILLER JOHNSON
Attorneys for Plaintiffs
Dated: October 8, 2026 By: /s/ D. Andrew Portinga
D. Andrew Portinga (P55804)
Bryce C. Akins (P88780)
Amanda L. Rauh-Bieri (P83615)
Business Address:
45 Ottawa Avenue SW, Suite 1100
Grand Rapids, Michigan 49503
Telephone: (616) 831-1700
portingaa@millerjohnson.com
akinsb@millerjohnson.com
rauhbieria@millerjohnson.comFile and source
- File
- gov.uscourts.wiwd.74935752.1.0.pdf
- Size
- 338,172 bytes
- SHA-256
- ebdaa6bfc6b916565f41c3a1e896cf2e9adaef10961bb49ee6255fa89d0dd3b3
- Original
- storage.courtlistener.com