UNLV faces taxing problem of how to repay IRS $500,000

Friday, Dec. 17, 1999 | 11:23 a.m.

When the Internal Revenue Service sent UNLV a bill for $1.5 million in back taxes on events held at the Thomas & Mack Center, university officials were at a loss as to where they were going to find the money to pay it.

If they were to have held a huge star-studded benefit concert at the Thomas & Mack or at their larger Sam Boyd Stadium to help pay off the back taxes, they'd be left with a new but similar problem -- how to raise the money to pay the taxes generated by the event.

While the university successfully hammered out a $500,000 settlement to reduce the taxes and penalties, it still has not identified how the bill will be paid.

"I can tell you it's not going to come from any source that will affect student services or quality of education -- not if I have anything to say about it," University Regent Steve Sisolak said.

"And I don't believe the IRS or federal government wants us to do anything that will hurt the high quality of education in our nation's colleges and universities."

Sisolak said that with such a large sum of money involved, UNLV officials eventually may have to bring the matter before the Board of Regents for help.

"I would suggest that at some point we work out a repayment plan with the Internal Revenue Service," Sisolak said. "Then I would think that we would continue to use the Thomas & Mack to generate revenues from future events to pay the back taxes over a period of time."

Sisolak also suggested that the cost of the tax be factored into future contracts with promoters for use of the facility so that UNLV keeps up future tax payments without diminishing the amount of funds generated for the university from events like rock concerts, boxing and rodeos.

University officials have long felt that revenue generated from such events should be tax exempt because they go toward offsetting the $16 million annual cost of operating the Thomas & Mack and paying for improvements and maintenance of the arena, which is a university building.

The IRS maintains that events that are not educational -- the main function of a nonprofit university -- should be taxed like any for-profit events.

The IRS declined to talk about UNLV's situation, saying it cannot comment on settlements and penalties because of privacy laws.

However, an IRS spokeswoman noted that in general discrepancies such as the one found at the Thomas & Mack are found during audits. The agency conducts audits on about 10,000 tax-exempt organizations annually, then sends a bill for the taxes that are due, the spokeswoman said.