01 Jul IRS Report: Central Iowa Casino Owes Up To $60 Million
According to an IRS report, Prairie Meadows, an Iowa casino, owes up to $60 million in IRS back taxes and penalties. Why? Because an IRS audit has determined that the Iowa casino has been operating more like a business rather than a nonprofit organization.
The IRS has very stringent regulations that determine what allows an organization to carry a tax-exempt status. It must have a charitable purpose, qualify as a religious group, be considered a scientific organization, serve a literary purpose, or qualify as an educational organization. Remember the Tea Party scandal in 2013 when the IRS investigated certain conservative political groups to determine whether or not those organizations should be granted tax-exempt status. More recently, petitions have risen up to demand that establishments like the Westboro Baptist Church (known for anti-gay rhetoric and picketing of soldiers’ funerals) be stripped of their tax-exempt status.
In 2014, Prairie Meadows showed revenue of 2.1 billion dollars. That’s billion. With a b. As in 2, followed by a 1, and 8 zeroes. A 93-page audit report issued by the IRS states that “The only difference in the operation of Prairie Meadows Racetrack and Casino and a for-profit casino is only that (Prairie Meadows) does not pay taxes.” The casino itself argues that it has received tax-exempt status for decades and that the annual $30 million dollars in tax breaks is put back into the community, with 2015 Legacy Grants of over $22,000,000 in 2015, including $1 million for the Des Moines public library, $1 million for the Science Center of Iowa. “We think we don’t owe any of it,” Tom Flynn, the casino attorney, said. “They’ve painted with a broad brush.”
A final resolution has not been made. However, Prairie Meadows shows that IRS back taxes are as problematic for titans of industry as for mom and pop shops and individuals.