The Polk County community stands to lose millions in taxes, revenue sharing, and charitable donations now that IRS wants to pull the tax exempt status of a Des Moines-area casino.
Between Polk County’s lease and revenue sharing agreements with Prairie Meadows, the hotel, casino, and racetrack contributes roughly $26 million annually the county.
Prairie Meadows is currently classified as a 501c4, the tax status for organizations that operate exclusively for the promotion of social welfare. Tom Hockensmith, chair of the Polk County Board of Supervisors, says if the casino loses this status, it would be a "travesty."
"We could be looking at trying to negotiate a new lease agreement with a lot less revenue available, a lot less," says Hockensmith. "The taxpayers of Polk County are the ones that took the risk when this place was built, and they’re the ones that should be able to enjoy the revenues that are created as a result of that and be able to put them back into their community."
Prairie Meadows also has revenue sharing agreements with the City of Des Moines and all of Polk County’s school districts. And, the casino gives millions in charitable donations.
Prairie Meadows says it will appeal the IRS's decision, saying that its net earnings have gone for the substantial community betterment and lessening the burdens of government.
The IRS has declined to comment, so it’s not yet known why the agency has deemed Prairie Meadows to be a for-profit company. Prairie Meadows's attorney Tom Flynn says he believes it could be because the IRS views casinos are commercial enterprises and therefore should not be afforded a tax-exempt status.
"We think the IRS is focused on the nature of the business, not on the way the monies, earnings have been spent," he says.
Flynn estimates the appeal could take up to two years, around the time the casino's lease agreement with Polk County is up for renewal