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Monday, March 17, 2008

Did Major League Baseball File an Incomplete Tax Return?

06_boc_990

Street & Smith's Sports Business Journal last week pointed out a potential problem with Major League Baseball's tax return for the year ended October 31, 2006:

MLB did not include the compensation amounts for its other top officers in its most recent return. The names of MLB President Bob DuPuy and four executive vice presidents are listed but without pay totals. Those numbers appeared in prior MLB tax returns, with DuPuy pulling in a total of $4.875 million in the 2005 fiscal year.

Nonprofit tax experts said such omissions are not permissible under the current tax code. “The [tax return] instructions just couldn’t be clearer. The compensation of the officers, directors and key employees must be disclosed in the return,” said Marcus Owens, former director of the IRS’s exempt organizations division and currently an attorney with Caplin & Drysdale in Washington, D.C., representing a variety of nonprofits.

Said DuPuy of that assessment, “We respectfully disagree.”

Leaving out officer compensation in Part 5-A of the nonprofit return could be considered an incomplete return and could subject MLB to fines up to $50,000 per year from the IRS, Owens said.

Here is the part of the return at issue [click on image to enlarge]:

Mlb

(Hat Tip to Jim Hart, reference librarian extraordinaire, for tracking down the return.)

Update:  Joe Kristan has more in Major League Baseball Gets a Free Return Review, including the compensation figures for its top 5 executives reported by MLB on its October 31, 2005 year-end return.

http://taxprof.typepad.com/taxprof_blog/2008/03/did-major-leagu.html

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Comments

I am not sure how much of a potential problem this is really. I have been involved with the filing of numerous corporate tax returns and a few non-profits and its pretty normal to not breakdown what the officers receievd in any detail. I have also seen where some companies simply say "information is available upon request". Not sure what the hub bub is, as I am sure from first hand knowledge, the Service who audits many of these returns hardly inquires and certainly never have I seen any penalties assessed regarding this "potential problem".

Posted by: gman | Mar 17, 2008 8:21:04 AM