Paul L. Caron

Monday, July 11, 2016

Widow Of Indiana Pacers Owner Plays Hardball With IRS, Goes On Offense In Defending Against Subpoenas In $21 Million Gift Tax Case

PacersIndianapolis Business Journal, Pacers’ Legal Tenacity on Display in IRS Fight:

The legal fallout stemming from Melvin Simon’s decision to unload his half of the Indiana Pacers to his brother Herb just a few months before his September 2009 death is getting crazier by the day.

Mel’s widow, Bren Simon, got the public spectacle rolling in March 2015 when she sued the IRS in an effort to overturn the agency’s determination that the terms of the deal were so tilted in Herb’s favor that Mel essentially gave him an $83 million gift.

That conclusion left Bren with a $21 million gift-tax bill, which she paid under protest but hopes to get refunded by winning the suit.

Bren’s decision to fight the IRS now is causing untold hardship for the Pacers—or at least that’s the posture the team is taking in response to subpoenas issued by the IRS for documents that would help the agency understand the ins and outs of the 2009 transaction.

A new court filing reveals the Pacers—along with Herb Simon, his son Stephen Simon, Pacers adviser Donnie Walsh and their law firm, Faegre Baker Daniels—have been fighting for months over what they view as overly broad subpoenas issued by the Department of Justice’s Tax Division, which is representing the IRS in the case.

The filing says the Pacers Group has made headway negotiating with the IRS to narrow the requests. But talks have stalled over the team’s request for a protective order that would ensure the confidentiality of sensitive documents.

One legal observer said the protective-order provisions the Pacers are seeking go far beyond the norm. One would give the team the right to designate Pacers-related records submitted by third parties as confidential, not just the records they submit. The other would prevent the IRS from sharing the information with other government agencies—a restriction that would prevent it from making criminal referrals if it finds evidence of a crime.

Celebrity Tax Lore, New Cases, Tax | Permalink