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IRS auditing 3 college bowl games

By Kay Bell · Bankrate.com
Thursday, March 13, 2014
Posted: 2 pm ET

Internal Revenue Service audits aren't limited to individuals. Just ask the folks in charge of three popular college football bowl games.

CBS Sports reports that the IRS is investigating tax returns recently filed by organizers of the Alamo, Gator and Fight Hunger bowls.

Apparently, the bowls made a lot more money this past college football postseason than they did the year before.

Audit income issues

Yes, unexpected changes in income, both up or down, can cause an IRS examiner to want to find out exactly what caused the dramatic change, be it for an individual taxpayer or an entity such as football bowl organizations.

A review last year by the San Diego Union-Tribune found that nonprofits that host college football bowl games command between $2 million and $54 million in revenue every year.

Gary Cavalli, executive director of the San Francisco Bowl Game Association, which puts on the Fight Hunger Bowl, told CBS Sports that an IRS official told him audits often stem from tips or media reports. That, said Cavalli, makes him think that bowls with increased revenues could spark tax interest.

If the IRS finds irregularities, in addition to collecting more from the bowls, the tax agency's findings also could affect a bowl's nonprofit tax status. Bowl operating groups generally operate under this favorable status because some of the money goes toward scholarships at the games' participating schools.

Interesting audit tidbits

While the overall issue of auditing bowl games is interesting, two other items in the news report caught my eye.

First, from the timing is everything file, the Alamo Bowl's internal auditor reportedly is speaking at the Football Bowl Association convention in April about how to respond to an IRS audit. I suspect this will be a very well-attended session this year.

Second, the sponsor of the Gator Bowl is TaxSlayer. The tax preparation software company, which first signed with the Jacksonville, Fla.-based bowl in 2011, recently extended its sponsorship deal for another six years.

Or for as long as the IRS says it's OK to play the game.

Prepare for, don't fear audits

Audits are one of the six tax terrors highlighted in today's Daily Tax Tip.

And yes, the bowl officials face the same IRS demands as audited individuals.

They will need to provide the IRS with complete and accurate records justifying the entries on their tax returns. As long as the bowl organizers -- or you -- can prove the tax claims are valid, they -- and you -- will be fine.

More tax info from Bankrate

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You also can follow me on Twitter: @taxtweet.

Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."

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1 Comment
Dave
March 29, 2014 at 4:18 pm

Have no problem paying taxes. My total disgust is with the way the government squanders/wastes and other wise irresponsibly expends them.

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