Monday, August 15, 2011

Lottery commission hires tax help

Posted By on Mon, Aug 15, 2011 at 1:57 PM

The Lottery Commission has voted to hire a tax attorney to try to straighten out its federal tax troubles — that big penalty for failing for the second year in a row to remit taxes owed on time.

Lottery director Ernie Passailaigue again explained himself to commissioners and said the lottery's accounting staff made a "good faith effort" to comply with IRS regulations and deadlines. He said the real issue was payments submitted to the IRS through the lottery's bank, Bank of the Ozarks, took 24 hours to clear. "The rules, as I understand them, are based on when it clears the IRS account, not when the action is taken by us," Passailaigue said. When asked about criticism directed at the lottery's outgoing CFO Philip Miley, who notified Passailaigue of the $98,673 IRS penalty last week, Passailaigue said he would not comment on personnel matters.

Another reason payments might have been late, Passailaigue said, was that as penalties began to accrue, funds submitted to the IRS went to pay for those penalties, not current amounts due. Commissioner Bruce Engstrom, a CPA, said you can tell the IRS where to apply payments so this did not happen in the future. This is the second year in a row the lottery has submitted late payments. "We could receive another notice for 2011," Passailaigue said. "We have to straighten this out." The lottery director said that his accounting staff was now submitting payments to the IRS directly through a secured website. Engstrom suggested that payments be made daily to avoid late charges. Passailaigue agreed and said he would implement that as a policy.

When asked about the commission's decision to hire outside counsel, Commissioner Steve Faris told reporters, "I'm comfortable that if we get the right people in place, they can get us the answers that we need and I think they're trying hard to see this doesn't happen again. But the main focus right now is trying to get the money back if we can and see that this doesn't happen again."

In other business, the commission discussed possibilities for increasing sales for online games like Cash 3, Cash 4 and Decades for Dollars. Vice President of Gaming David Barden recommended various promotions like additional prize money and some instant payouts. Barden also announced the creation of a new lottery raffle game and that Powerball tickets will be sold at a $2 price point starting in January.

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