6-25-02, 5:55 p.m.
BY GEOFF HOBSON
The Hamilton County Commissioners agreed to join with the Bengals in the club's defense of an Internal Revenue Service claim on the revenue of sale from charter ownership agreements (COAs).
Both the County and the Bengals dispute the IRS' claim that the club owes $14 million in taxes from the $26 million the County raised in the selling of COAs from 1996-2000 . News reports and county audits from that time period show the team never had the $26 million and it stayed in the County's bank account as a County program designed to help fund construction of Paul Brown Stadium.
In the club's first response to the IRS claim, Troy Blackburn, the Bengals director of business development, praised the County for protecting taxpayers.
"The County's action properly framed the matter for what it is: an effort by the IRS to overreach and assess taxes where none are due," Blackburn said. "The Club applauds the leadership of County Commissioners (Tom) Neyer and (John) Dowlin for standing up for the interests of local taxpayers and for allowing the County and the Club to put forth a winning case. "
The Bengals have agreed to split the legal bills for the case even though the stadium lease gives that obligation to Hamilton County. The county will pay the first $175 an hour for defense lawyers. The lease also states that the County has
the obligation to pay the $14 million. The team is not expected to pay rent while it pays the $14 million and then sues to get it back.
Todd Portune, the lone dissenting commissioner, released a statement Tuesday in which he said, "The Bengals need to do the honorable thing and assure Hamilton County that they will not break the promise and promise today that the Bengals' contribution to the cost of the stadium will not be reduced by forcing taxpayers to pick up any part of this IRS assessment, or the costs of its defense."
The Bengals, who are also backed by County Prosecutor Mike Allen and County Administrator David Krings, argue they have exceeded their promise to County taxpayers by agreeing to pay half the legal costs.
"The 26 million dollars Hamilton County raised by selling COAs were private dollars that went directly to the County from fans seeking the best seats in Paul Brown Stadium," Blackburn said. "These funds replaced tax dollars that Hamilton County otherwise would have needed from local taxpayers. As in other cities, seat license revenues that go towards stadium construction are understood to be a private contribution. Local critics characterized the funds differently six years ago and may do so again now, but that does not change the facts regarding the COA program."
The NFL had no comment Tuesday.
"It's a realization by both the commissioners and the team that fighting the IRS is a benefit for both the taxpayers and the Bengals," Krings said after the vote.