April 17, 2005

Queen Mary operators facing tax trouble

This news online.... how long before the old Queen Mary goes bust??
 
 
"IRS seeks to levy rent merchants pay to ship's foundation; county wants property revenue.

By Jason Gewirtz
Staff writer
 
LONG BEACH — The city of Long Beach isn't the only government agency seeking money from the Queen Mary's operators.

The Internal Revenue Service has sent levy notices to the ship's merchants in an effort to resolve a $490,000 payroll tax dispute with the ship's operator dating back to 2000.

The notices directed the shop operators, who pay rent to the RMS Foundation, to divert future rent to the IRS to help resolve the foundation's debt.

Joseph Prevratil, the foundation's president and CEO, said Thursday that he expects the issue to be resolved before the merchants' next rent payments are due in May. The dispute is over penalties and interest owed for late payments during two financial quarters in 2000, he said.

"The fact of the matter is we are working on this with the IRS," Prevratil said.

An IRS spokesman said the agency does not comment on individual cases. Several merchants who lease space aboard the ship also declined comment, directing questions to Prevratil.

The levy notices are unrelated to a recent bankruptcy filing by Queen's Seaport Development Inc., which leases the Queen Mary and its surrounding 55 acres from the city of Long Beach, Prevratil said. QSDI subleases the Queen Mary's daily operations to the nonprofit RMS Foundation. Prevratil is the chief executive of both operations.

"It's unfortunate timing, OK, but it has nothing to do with QSDI," he said of the foundation's tax issues.

City officials, who are fighting QSDI in bankruptcy court over $3.4 million in disputed rent, said they were unaware of the outstanding RMS Foundation tax issues and want to know more.

"We're inquiring about it through the bankruptcy," Deputy City Attorney Charles Parkin said.

QSDI sought bankruptcy protection last month after city officials demanded past rent and declared the company in default of its 66-year lease. The company disputes the rent claim.

But while Prevratil said the RMS Foundation tax issues are separate, QSDI has tax issues of its own, according to an April 7 bankruptcy court filing.

In the filing, QSDI noted that it owes the Los Angeles County Tax Collector $452,599 in secured real property taxes from 2003-2004 and 2004-2005, and $73,821 in secured personal property taxes from the same period.

The claims were listed as part of the company's summary of schedules required by the bankruptcy court.

In the filing, the company also formally disputed the city's $3.4 million rent claim. QSDI also said the ship and surrounding land were most recently assessed at $40 million. Prevratil said the assessment was performed in 1998.

When Prevratil took over the ship's lease in 1993, he did it under the umbrella of the RMS Foundation. QSDI formed in 1995 and renewed the lease in an effort to develop the surrounding land. QSDI then subleased the ship's daily operation back to the foundation.

Although the RMS Foundation is not part of QSDI's bankruptcy case, the two entities have various financial agreements that at times make them difficult to separate. QSDI's latest bankruptcy filing notes that the two entities share numerous financial transactions in the normal course of business. The filing also makes reference to $4.7 million that the foundation owes QSDI.

The IRS sent the levy notices last week to various merchants who lease shops aboard the ship from the foundation. Several off-ship merchants who lease space from QSDI also received notices, although Prevratil disputes the notices, saying QSDI is not part of the payroll tax dispute.

A levy is a legal seizure of property to satisfy a tax debt. In the case of the RMS Foundation, which doesn't own the ship, a levy can include rental income it collects.

Levies are different from tax liens, which are used as security for a tax debt.

The RMS Foundation's financial statements for 2000 note that the foundation was delinquent in paying its federal and state payroll taxes, and sales taxes for that year. At the time, QSDI advanced the foundation $600,000 to cover the payments, according to the statements."

 
 

Send instant messages to your online friends http://uk.messenger.yahoo.com

LinkWithin

Related Posts Plugin for WordPress, Blogger...