According to a report from the Business Record newspaper, the decision by the tax authority would see the area around Altoona near Des Moines lose out on about $30 million a year that is currently returned to a variety of charitable and government organizations.
The facility is rented from Polk County for $15.6 million a year and was told in March that the IRS was considering whether to revoke its status as a 501(c)(4) social welfare organization. This designation is only granted to bodies that “exclusively benefit the social welfare and lessen the burden of government” by returning all of their profits to charities and government bodies.
Despite paying for signature projects including the annual mortgage for the Iowa Events Center, the Prairie Meadows Racetrack And Casino returns about 92% of its gross receipts to gamblers. The venue’s attorney, Tom Flynn, stated that the IRS believes that if the property is tax-exempt, then income such as revenues from its hotel, banquet hall and gift shop should be taxed.
In 2013, the Prairie Meadows Racetrack And Casino saw revenues of almost $2.2 billion and paid out $1.9 billion in purses while handing out grants worth $20.8 million. It additionally bequeathed $3.9 million to the city government of Des Moines that year while Polk County received $10.4 million in fixed payments, which were converted to a percentage of gross revenues two years later.
Flynn declared that the operation has moreover returned $1.4 billion in scholarships, grants for cultural projects and gambling taxes since it opened as a non-profit business in 1989 with this designation reaffirmed eight years later and again in 2002.
The Prairie Meadows Racetrack And Casino now has 30 days to respond to the IRS and make a case for why its non-profit status should be retained. To this end, Gary Palmer, the enterprise’s CEO and President, declared that a Washington, DC, tax attorney has been hired to fight its cause.