IRS and NFL player Rolle in dispute
Feds say player owes $2.2 million in back taxes and penalties; he sues and says the agency has treated him badly.
The Internal Revenue Service says Arizona Cardinals safety Antrel Rolle understated his taxable income by more than 50% during his first two years in pro football, sending him a $2.2 million bill for back taxes, interest and penalties.
The IRS claims are contained in a previously unreported lawsuit Rolle filed in U.S. Tax Court against the agency. His petition asserts the IRS violated the Taxpayer Bill of Rights, denied him due process and failed to treat him in a "fair, professional and courteous manner." He complains the agency refused to transfer his tax audit from Sacramento to Los Angeles where his advisors and records were located and would not accept proffered documentation.
However, Rolle does not specifically dispute the IRS audit findings, which he attached to his pleading. The IRS findings state that it was discrepancies and inconsistencies in Rolle's own filings that accounted for most of the bill. Cited points included nonexistent or unlikely addresses, huge deductions claimed by Rolle for a personally run executive business and hard-to-locate churches listed as recipients of big cash gifts, with the amounts and descriptions of these donations changing.
Hiram M. Martin, the lawyer for Rolle in the tax case, did not respond to requests for comment left at his Los Angeles office.
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Rolle is a new twist on what has become an epidemic of legal troubles plaguing NFL players. His case is a civil tax matter, and Rolle is the plaintiff. Recently New Orleans Saints defensive end Bobby McCray and Atlanta Falcons receiver Eric Weems were arrested for driving while under the influence, while Green Bay Packers defensive tackle Johnny Jolly and Falcons lineman Jonathan Babineaux were charged with drug offenses. None has admitted guilt. Player legal problems are so widespread that there is even a blog devoted to NFL-related crimes.
The hard-tackling Rolle, 27, just finished his fifth season in the National Football League, where he has developed into a top defensive free safety with a knack for turning interceptions into touchdowns. His last game was on Jan. 16, when a head injury forced his first-quarter departure during the Cardinals' 45-14 divisional playoff loss to the New Orleans Saints.
The dispute with the IRS concerns 2005 and 2006, when Rolle was newly minted from the University of Miami. According to the IRS, he reported a taxable income of $669,000 for 2005 when it should have been $2.15 million. For 2006 Rolle reported $3.2 million; the IRS said it should have been $6.1 million. Combined, the IRS said Rolle understated taxable income those two years by 53%.
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The IRS agent wrote that Rolle said on his tax returns his home address was in Fair Oaks, Calif., a suburb of Sacramento, but that it turned out instead to be an address for Martin, his lawyer. A tax preparer for Rolle later turned in a document putting his client's home address in what a visit by Forbes showed to be an open-air office park in the Granada Hills section of Los Angeles.
Drawing particular IRS attention was Rolle's report of a Schedule C "sole proprietorship" involving "management and consulting" that he said he operated both years. Over that period he listed $557,000 in revenue and $1.9 million in expenses. The IRS disallowed all but $71,000 of the expenses, which included $254,000 for "advertising" and $372,000 classified as "rent or lease--vehicles." Rolle said his business was located at an address in Chandler, Ariz., a Phoenix suburb. But "correspondence mailed to that address was returned indicating 'no such number,' and electronic research turned up the same result," the IRS agent wrote.
Schedule C losses are a particular focus for the IRS. According to a report last year by Congress' Government Accountability Office, the IRS estimates 70% of taxpayers who report net losses on their Schedules Cs exaggerate, mainly by overstating expenses, and that almost of these losses are used to offset income from other sources such as high salaries.
Rolle also claimed $2.5 million in cash contributions to two churches with similar names in Granada Hills: $636,000 in 2005 to the Victory Chapel Christian Fellowship Church, or VCCFC, and $1.9 million in 2006 to Victory Chapel Church. The IRS said Rolle's 2005 return included a letter in the name of VCCFC listing a $632,000 cash donation--$4,000 less than what the return claimed. Asked for more documentation, Rolle produced another VCCFC letter listing a $300,000 donation -- none of it cash -- the IRS audit report said.
To support his 2006 largesse, the IRS said, Rolle produced a Victory Chapel Church letter -- from a different address, but one just across the street from Rolle's alleged home in the office park. This letter put the gift at $1.8 million, $100,000 less than claimed, and none of it in cash, the audit report noted.
Citing these and other inconsistencies, the IRS audit concluded the letters "cannot be relied on as support for charitable contributions." The IRS said it was unable to verify existence of the churches but noted the "almost identical" addresses of Rolle's purported office-park home with Victory Chapel Church, "leaving one to wonder if the addresses are legitimate addresses."
Forbes took a spin through middle-class Granada Hills, which is bisected by the Ronald Reagan Freeway in the sprawling San Fernando Valley 25 miles northwest of downtown Los Angeles. The official address listed for VCCFC is a copy shop mail drop. "We're not even open on Sundays," a worker there joked.
The address listed in Rolle's IRS paperwork for Victory Chapel Church is a dermatology office fronted by a tall sign proclaiming treatment of "diseases of the skin." Workers there said they have never heard of Victory Chapel anything.
But at the open-air office-park address across the street listed as one of Rolle's homes, Harold G. Sterling knew something. Sterling, who runs a corporation services business there named I.A.M. Corpservices Inc., said he was the registered agent for Victory Chapel Christian Fellowship Inc. (without the world "church"). He described that as a stand-alone institution unaffiliated with any denomination that regularly met on Sundays in the facility of another church and had tax-exempt status from the IRS.
Sterling said he used to be the church's president and was still a member, and that the church faithful valued their privacy. He said he would not provide the name of church leaders, the location of worship or the size of the congregation. Sterling said his institution recently merged with another church he also wouldn't specify.
Working out of a tiny, one-room office, Sterling couldn't explain the discrepancy on the IRS documentation in church names, and he professed little knowledge about Antrel Rolle. But, Sterling declared, "I can tell you he doesn't live here."
--Research assistance by Deborah Weinstein and Susan Radlauer.
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