The case involving the Indiana Pacers, the sister-in-law of the team’s owner and a $21 million IRS tax bill isn’t over yet. In 2009, a few months prior to his death, Mel Simon gave his half of the Indiana Pacers to his brother, Herb Simon. As this transaction is scrutinized by many, the IRS has subpoenaed the Indiana Pacers for documents that assist in providing details of this alleged gift. The team, former general manager Donnie Walsh and Herb Simon have requested a federal court to issue a protective order against the IRS.
Bren Simon, Mel’s widow, allegedly approved of Mel’s gift, and later received a bill for her half of the gift taxes associated with the transaction. Bren Simon then sued the IRS attempting to reverse the agency’s determination that the transaction was essentially an $83 million gift. This after an IRS audit resulted in a $21 million gift-tax bill, which she paid under protest and is now attempting to overturn.
The lawsuit of Mel Simon’s widow is causing problems for the team itself according to Pacers management. At least this was the team’s reaction to subpoenas issued by the IRS requesting documents from the team. The purpose of the request is to assist the IRS in discovering the details of the Simon brothers’ 2009 transaction, but the team has argued that the subpoenas are overly broad and, in recent court filings, claims to have made progress negotiating with the IRS to narrow the requests. However, there is no reported progress in discussions regarding the Pacers’ request for a protective order to ensure the confidentiality of sensitive documents.
Bren Simon and the IRS served subpoenas against Herb Simon and the team specifically requesting team financial statements, tax returns, game reports, and NBA collective bargaining agreements. The attorneys for the “Pacers Group,” contend that this financial information is confidential, and have requested that any information provided will not be shared among other government entities. Of course, this restriction would prevent the IRS from making a criminal referral if it finds evidence of actionable criminal activity. Stay tuned!
If you live in the New York or the Tri-State area and have any questions about any gift taxes, call THE TAX EXPERTS at the Thorgood Law Firm www.thorgoodlaw.com. For a FREE consultation, call 212-490-0704.
