Pure As the Driven Snow

Criminal tax defense lawyers refer vernacularly to criminal tax cases that arise from legal business operations as "pure tax cases" as opposed to other tax cases that arise from illegal business activity. 

Interestingly, Agents with the Internal Revenue Service raided the offices of nightclub operator Pure Management Group last week thereby creating the penultimate "pure tax case." The news accounts speculate that the investigation stems from cash payments patrons of the various Pure nightclub venues paid to doormen and other personnel to gain admission and for other services, including "bottle service" the historical equivalent of a "minimum" that a patron must commit to spend in the club. Those nightclubs typically generate 5000 patrons per night on weekends and each may pay $100.00 to $1,000.00 for the privilege of being "selected" to enter the club from a line that may extend for city blocks and last for hours. 

The real hubub stems not from the investigation itself, but rather from the news that doormen at these nightclubs were and have been making nearly $500,000.00 per year, mostly tax free (until now), performing a relatively simple function. Truly a situation of being literally in the right place at the right time. 

What happens next is the " we will cooperate quote from Pure which read as follows:

"Pure Management Group is fully cooperating with this IRS investigation and looks forward to a quick and satisfactory resolution," a statement released by the company said. "Until that time, we will have no further comment on this matter."

Pure Management Group owns some of the most popular venues in Las Vegas, including the Pussycat Dolls Lounge and Venus Pool Club at Caesars; Coyote Ugly in New York-New York; Fat Tuesdays in the Forum Shops at Caesars Palace; Tangerine Lounge & Nightclub at Treasure Island; and Social House at Treasure Island. The company's success has resulted in high-profile investors such as Andre Agassi and Steffi Graf, Shaquille O'Neal and Celine Dion

This investigation may be difficult for the IRS because with the high profile investors come the high profile defenses. The IRS will likely seek to squeeze the investigation from the outside in, meaning that they will go after the employees, the doormen, bouncers and waitstaff with the hope of resolving those cases by obtaining information and cooperation for cases, civil and criminal, aimed at the larger newsmaker investors and other owners. To readers of this Blog, you already know the objective is to create high-profile cases that make the news and then increase the potential for deterrence. It's almost March.....six more weeks until tax time.