The IRS issued a preliminary adverse determination against a $410 million bond financing deal that allowed the Seminole Tribe of Florida to build two hotel-casino complexes. The decision could affect other tribes.

The agency said the bonds are not tax-exempt, meaning the tribe and its main investor could be on the hook for federal taxes. According to The Baltimore Sun, the IRS could collect $233 million in unpaid taxes.

The bond deal was arranged by David S. Cordish, a developer from Baltimore. The tribe agreed to pay him 30 percent of profits from the two casinos over the next decade, a figure that could reach $1.3 billion, the paper said.

But a tribal lawyer said the deal will have to be reviewed in light of the IRS ruling. "Whoever opined that those bonds were tax-exempt ought to be contacting their malpractice lawyers," the lawyer was quoted as saying.

The Seminole Tribe isn't the only one facing scrutiny for using bond deals to finance casinos. The IRS is looking into the Cabazon Band of Mission Indians of California, which recently struck a $145 million bond deal. The Morongo Band of Mission Indians also plans to issue $145 million in tax-exempt bonds for a casino project.

Get the Story:
IRS casts doubt on Cordish-Indian deal (The Balitmore Sun 12/7/)
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Relevant Links:
Seminole Tribe of Florida - http://www.seminoletribe.com

Related Stories:
Tribal tax-exempt bond bill pushed in California (08/05)
City to issue $145M in bonds to help Morongo Band (07/28)