Tax Roundup, 6/15/16: Prairie Meadows insiders suspect whistleblower. And: things are due today.

June 15th, 2016 by Joe Kristan

Things due today include:

Form 1040s for U.S. taxpayers living abroad. Extensions are available.

Second quarter individual and trust estimated tax payments.

Second quarter Estimated tax payments for calendar year corporations.

Second quarter withholding payments on business income for calendar-year partnerships with foreign partners.

Electronic payment options are here.


pmaltoonalogoWe file tax returns that are available publicly on the web. We advertise on T.V. How did the IRS ever find out about us? The Des Moines Register reports on suspicions that a “whistleblower” may be responsible for the IRS move to revoke the 501(c)(4) exemption for Prairie Meadows casino. From Prairie Meadows points finger at whistleblower:

The Des Moines Register listened to tape recordings of those meetings last week after it protested the board’s decision to close the meetings. Revocation of the casino’s tax-exempt status could have far-reaching impacts across central Iowa, because the Altoona casino funnels millions of dollars each year to local governments and nonprofit organizations.

Brian Wessels, Prairie Meadows’ chief financial officer, can be heard telling the board during its March meeting that the 18-month audit leading up to the May revocation was initiated by a referral. He noted that the IRS offers finder’s fees, and groups make millions of dollars from turning in tax cheats.

The information prompted disgust from some board members. One female board member, whom casino executives refused to identify, used an expletive to describe the whistleblowers.

The article describes speculation by Prairie Meadows insiders as to the possible identity of the postulated whistleblower. It’s not a sure bet that there is one, though. Casino attorney Tom Flynn was more cautious:

“Don’t take it as gospel this is true,” Flynn said. “I can tell you we’ve not seen any documentation of that.”

The caution is justified. Whistleblowers usually come forward with information otherwise unavailable to the IRS. The revocation action isn’t based on anything like that, as far as we know. It’s apparently based on casino gaming not being a tax-exempt function.

There were plenty of ways the casino might attract IRS attention without involvement from a whistleblower. Prairie Meadows is big, with revenue in the billions of dollars. It is highly visible, both in its advertising and its subsidies to government projects. It makes annual filings to the IRS on Form 990 that are available on the web to anybody who cares to look.

Also, it is one of only two 501(c)(4) casinos in the entire country. With an IRS enforcement policy that says gaming is not a tax-exempt activity, you don’t need a whistleblower conspiracy to explain the IRS action.


TaxProf, The IRS Scandal, Day 1133. “There is a developing appearance that nonprofit advocacy groups, with judicial support, are having better success than Congress in investigating the executive branch of the federal government and securing the release of documentary evidence.” That’s why the IRS and the administration hate unfriendly 501(c)(4) outfits in the first place.


7-30 fountain


Kay Bell, Trump adviser recommends reducing tax breaks for very wealthy philanthropists and business nonprofits.

Jason Dinesen, 501(c)(3) vs. 501(c)(4) vs. 501(c)(7), Part 2.

Leslie Book, Appeals Court Rejects Tax Refund For Former Qwest CEO Nacchio’s $44 Million Forfeiture. “Former Qwest CEO Joseph Nacchio is no stranger to lots of attention;  his conviction for insider trading was front page news, and following his release from prison he has been an outspoken critic of the US penal system and the laws with respect to insider trading.”

Benjamin Leff, Universal Basic Income and Marginal Rates. (Surly Subgroup). “He’s right that to talk about a UBI in the context of fundamental tax reform without talking about marginal rates is silly.” Surly Subgroup joined the tax blog world April 15. It features academic tax nerds. It is now on our blogroll.

TaxGrrrl, Tax Meets Technology: A Chat With Jessica Mah Of “Her company, which offers unlimited, flat-fee accounting/tax/payroll services as software, aims to change the role/definition of the CPA and accounting professions.”


Lew Taishoff, NEW SHERIFF, NEW RULES. Mr. Taishoff covers Tax Court decisions in wonderful detail, and I have belatedly added him to my blogroll. Thanks to Peter Reilly for letting me know what I had been missing. His most recent effort starts:

Ch J L. Paige (“Iron Fist”) Marvel swings into action as she begins her second week of Chieftainship, by complying with last year’s Congressional mandate, found in Section 431 of the Revenue Act of 2015, s/a/k/a Protecting Americans From Tax Hikes.

I propose a new enactment, to be entitled protecting Americans from cutesy acronyms.

I vote yes.


Erica Wilt, Should Philadelphia Soda Drinkers Fund City Services? (Tax Policy Blog). “If Mayor Kenney’s budget proposals are considered essential to Philadelphians, then they should be funded by a broad, neutral tax.”

Jim Maule, Bait-and-Switch “Sugary Beverage Tax” Tactics. “What is happening in Philadelphia is counterproductive to the claimed health goals of the soda tax lobby.”

Jeremy Scott, Voinovich Opposed Only the Second Round of Bush Tax Cuts (Tax Analysts Blog). “Voinovich was an extremely popular governor known primarily for his fiscal discipline.  Many of the remembrances of the Ohio politician have praised him for standing against his Republican allies and opposing the 2003 tax cuts proposed by George W. Bush.”

Matt Gardner, LinkedIn Acquisition “Connects” Microsoft to New Tax Avoidance Opportunities (Tax Justice Blog). Who says social media doesn’t work?


News from the Profession. The Accounting Firm Dress Code Revolution Rolls On  (Caleb Newquist, Going Concern). I knew that allowing people to stop wearing hats was the first step down a slippery slope.


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