Former Nashville Banner publisher Irby Simpkins has admitted defeat in his running battle with the IRS and was ordered to pay more than $5 million in back taxes and $1.8 million in penalties by a U.S. Tax Court in November. He declined to say whether he has paid the sum.
Simpkins confirmed to The City Paper that he invested in a series of transactions on the advice of his accounting firm Price Waterhouse in the late 1990s. The IRS claimed that there were deficiencies in four different tax years, 1996-1999. In the largest of those years, 1998, Simpkins was found to have underpaid his taxes by nearly $4.7 million.
In February 1998, Simpkins and his partner Brownlee Currey took $65 million from the rival Tennessean and Gannett to make their paper, the Banner, go away. Simpkins’ final proceeds from the sale, approximately $20 million, generated a large tax liability.
Beginning in the early 2000s, Congress, the Treasury Department and the IRS began cracking down on foreign investment programs like the ones Simpkins was involved in. Price Waterhouse, now Pricewaterhouse Coopers, KPMG and several other firms would later settle over billions in unpaid taxes sheltered by schemes marketed variously as FLIP, OPIS, BOSS and Son of BOSS.
Simpkins says that after fighting the IRS for 10 years, an “old retired fella” had to move on.
“[The IRS] drug their feet and drug their feet and never came down with any conclusion because they were trying to prove criminal action against the partners at KPMG. I was just the tail on the dog on that one,” he said. “I went for 10 years without being able to have my case heard. Well, in that 10 years, the IRS spent a lot of money investigating, not only my transaction — I was almost a nonentity — but investigating over 700 taxpayers nationwide. They settled with the accounting firms for fairly nominal fees in exchange for the accounting firms furnishing the names of all of their clients that they had recommended these investments to and had made those investments. And so the reality was that after 10 years, it was insane for me, at 68, to continue with this kind of worry and frustration and not be able to deal with the Internal Revenue [Service]. At that time my attorney and I decided the best thing to do was just settle this.”
Simpkins’ penalties were doubled from 20 percent to 40 percent as the IRS found the case to be a gross valuation overstatement.
The sale of the Banner left Nashville with just one remaining daily newspaper, something Simpkins said he regrets. He told The City Paper that there was a local buyer who was interested in purchasing the afternoon paper, but that Gannett’s deal was the best.
“We had some offers. But when you're in a joint operating agreement, there's only one buyer, that's your partner,” Simpkins said. “And let me say this about Gannett — they didn't leverage that against us. They paid fair value for what we had to sell, which was wonderful.”
Simpkins also said that another publicly held publishing company was interested in purchasing the Banner but declined to name it.