Latest Development in the IRS Tax-Exempt-Bond Investigation
 

Page C1 of today's Daily Sun reports another unfavorable development in the IRS investigation of the dealings between the Center District and the Developer, i.e., an IRS "Engineer's Report" (whatever that is) critical of the pricing of the amenities which the Developer sold to the Center District. As you will recall, the Center District financed the purchase of those amenities using purportedly tax-exempt bonds. Among other things, the IRS claims that the purchase price was inflated and, therefore, the bonds don't qualify as tax-exempt.

Unfortunately, the Daily Sun article is written, almost certainly intentionally, so as to be incomprehensible to even relatively well informed readers. But, hey, for a change, at least the Daily Sun, even with the obfuscation, reported a development in the most-important issue facing The Villages. I guess that is progress.

Hopefully, the Engineer's Report will be posted on districtgov.org website and/or the next POA Bulletin will have an explanation.

When dealing with the IRS, their writings are usually incomprehensible to most citizens. How can you jump to the conclusion that the Daily Sun wrote the article, in an intentionally ambiguous way, to confuse the reader?

Bogie: What does it say? I am interested and I cannot find it online.

I agree Bogie.

In no way did I think it was trying to muddy the waters. In fact I was going to post just the opposite from Avogado's opinion.

Janet Tutt wrote a clear observation, at least to me.

She pointed out the errors that the IRS had made.

On the contrary, the IRS was quite clear when explaining the method used to determine income flow of the amenities, as well as the methods for appraising the buildings purchased by the VCCD when it wrote its Proposed Notice of Issues in 2009. These accounting methods were the basis for the amount of bonds purchased by the VCCD and one of the IRS arguing points. I doubt the Daily Sun, Village Voice or POA will expound on this topic...but then I could be wrong?

Big brass ones....
 

Yes sir, big brass ones !
Sorry - first thing that came to mind considering it came from a lawyer.

The article is not on line at this time.

Can you are someone else summarize what the article says?

From what I gather, it is a filing a by the IRS that states why the sale price of the property from the developer to the district was too high and thus disqualifies the bonds from being municipal tax free bonds.. and the article responds to the filing by stating the reasons they believe the IRS is incorrect? Am I right so far? Thanks for your help.

Patience grasshopper, it may be posted on the district site in a few days.

Answer to Bogie Shooter's Question
 

Bogie Shooter, have you read the article?

If you have, I am surprised that you would ask the question. But to answer it:

First, I don't think that I "jumped" to the conclusion the article is "ambiguous". There is nothing ambiguous about it, and I never said there was. In my view, calling the article "ambiguous" would give a bad name to the concept of ambiguity. My point was that the article so incredibly unclear, that (given the nature of the subject matter and the Daily Sun's history) the lack of clarity had to be intentional. Here is my reasoning:

I spent a good part of my career working on acquisitions and, although not a financial analyst, I think that I have a basic understanding of the issues involved in the valuation controversy here. Because I have a few hundred thousand dollars invested in The Villages and like to stay on top of matters that could impact my investments, I have spent a fair amount of time studying the documents involved in the IRS investigation. In other words, I know basically what's going on with the IRS investigation.

Despite my background, after reading the Daily Sun article, I have no understanding as to exactly what the new IRS Report concludes and of the basis for that conclusion. All I learned from the article is that Janet Tutt doesn't think the IRS knows what it's talking about. Her position is hardly surprising, but it is not particularly comforting (since the IRS has a special unit specializing in the investigation of municipal-bond abuse and deals with valuation questions on a daily basis). In any event, Janet Tutt's opinion hardly ought to be sole focus of a "fair and balanced" Daily Sun article on the latest development in a matter of this importance.

There is certainly no way that the typical Daily Sun reader, who knows virtually nothing about the IRS investigation or about present values of future income flows, would, after reading the article, have a clue as to what is going on or of its importance. Given the critical importance of the IRS investigation to Villagers and the Daily Sun's history of either not reporting or burying news stories unfavorable to the Developer, there is not the slightest doubt in my mind that the lack of clarity in this article is a continuation of the Daily Sun's past practice in this regard.

I agree with Gracie and Bogie.

Holy S---! I guess I was wrong.

Does anyone know much is the defense in this investigation costing villagers, is it coming from the amenities fees, and has the Developer contributed to the cost of the defense?

This is getting interesting...........again............:popcorn:

Wouldn't just be easier to go back and read all those earlier posts?

The IRS could rock this place
 

With the past actions of the daily sun(not real objective). And the past record of the IRS (they don't lose many). I am very concerned about my investment here. This could rock the villages. Folks the IRS has seen most dog an pony shows.

Need you ask why they call TV, "living in the bubble."Many Villagers don't want to know, don't understand, or don't care.Unfortunately, the IRS's problem with the Developer and the present value of future cash flows is not going away. I really appreciate you staying on top of the situation and giving us the facts,because you won't find them in the Daily Sun.By the way, i researched this entire situation like i was studying for a college final exam, and still decided the pluses far outweighed the negatives, and TV was the place for me.:read:

What bothers me is that the Washington revenue wolves are very hungry and TV probably looks mighty inviting to them. I think the whole thing is very unfair to villagers. I still believe this issue would not be a deal breaker when the price and time is right.

In all due respect, if you read anything issued by the IRS, as relates to this investigation, you would recognize immediately that an individual does not have to be proficient in valuations acquistion/mergers, or anything else All they need is to be able to read at a 10th grade level. The real question, who is protecting our interests?

The morses will look out for us
 

I am sure the morses will protect all of us. NOT! If it comes down to wire as to who has to pay we have nobody to represent us. All of this could be the like huge sink whole for the current management. You just hope whoever picks up the pieces is able fund at least a fraction of the current lifestyle. If this drags out at least most of us won't live long enough to see the appeal process completed. With any luck our heirs will be able to salvage some value out of our investment, talk about leaving them with huge debt that is a real possibility.

Just a comment: We and many others do not think of our home as an "investment" as some have called it here, especially in the current national economy and housing market. It could be decades before home prices come back up to the prices at which they were selling in most places in the mid- to late-1990's.

That's part of the reason many of us down-sized when we bought here, into a comfortable, sturdy, sensible home/CYV in the 175,000 to 215,000 range.....one that is in a reasonable price range for reselling...a range that many potential buyers can afford to buy and pay taxes on.

This thread and the topic can sound ominous and discouraging to potential newbies/buyers/wannabe's. If you're worried about your "investment", it would be a good idea to not scare buyers with pure conjecture about what truly is unknown at this point in time.

The sky is NOT falling
 

The sky is not falling ,however you need to know the facts.
1. The IRS is coming after the villages they believe that something is wrong with the bonds that were sold here.
2. If they (the IRS) are correct it could cost many millions of dollars to get this all straightened out.
3. We as property owners are in this together. We really are floating in an ocean without a paddle or map on where to go.
4. The IRS track record is pretty good.
5. I am not being a nasayer, just someone who is very worried about the future of the villages as we know it. These could be the "good 'ol days" of The Villages.
I chose not to stick my head in the sand, but try to gather the facts and be ready for the potienal finacial collapse of this wonderful place.
As far as buyers, well I would want to know what is really going on. These are major issues that should be discussed. You can bet the salesmen for Tv are not telling possible buyers. " the IRS is investigating, and if THe villages lose it will rock the finacial foundation of this place"
Please don't attack the messenger. I respect your right to have an opinion. Yes I am a busy person, just because we don't agree, I am not asking others to not post.

Leafblower, since you say we need to know the facts...please explain to me how the outcome of the IRS investigation could result in the “financial collapse” of The Villages.

Yes, please present the 'worst case scenario' for us. In detail. When I've seen the numbers before, even if we had to foot the bill, it wasn't much per household. But I think many have argued that we wouldn't be stuck with the bill.

Thanks.

And continue to argue, based soley on assumptions.

Thanks Leaf for your comment. I think the key point you made is that we need to respect the opinions of people who post here, even if they do not happen to agree with yours. The whole IRS thing is very dicey, and no one knows what will happen. Yes it may only cost each property owner "a few thousand dollars", but did it occur to anyone that some people just don't have that kind of money? Then there would be a class action lawsuit that would drag on for years, etc.. not a good thing, but all this is conjecture at this point. We just do not know. But to imply that someone has an axe to grind, or is not busy because that person happened to share their concerns, is very disrespectful to say the least. AS far as a house being an investment, I think we've all learned that that is not the case, but you hate to see someone invest $300K+ in houses, as a lot of people are doing now, and see them lose their shirts in the event of an adverse IRS ruling. In my opinion, to keep them in the dark about the IRS investigation and its possible implications is unethical. People are grownups. They can see both sides and make an intelligent decision. At least they will be coming into this place seeing the whole picture, not the half picture painted by the commission paid sales people.

The commissioned paid sales people are "keeping them in the dark"? I don't think anyone understands the issue clearly, even the frequently changing IRS agents in charge.

How people post on this issue to me is very predictable. They post the same on almost all issues involving whether they think the Morses are someone they admire or someone they do not admire.

There are many people thinking to buy here, that maybe shouldn't be thinking to buy here or to relocate anywhere at retirement, because they can't afford it. I think that the range of home options is very democratic and affordable for most people, but it depends if they have prepared financially for their retirement, even if they stay where they are. Moving is a significant expense no matter what your financial status is.

I think that the number stated was less than ten thousand dollars, in fact far less than ten thousand dollars. IF, and again I say IF we had to shoulder the debt. Now that isn't chump change, but I am guessing and hoping that most of us have enough money put back for some bad thing to happen and thinking and hoping it would be a figure that would protect them from bad surprises of any kind.

One of the reason that this country is in such a financial mess is that people bought what they couldn't afford to pay for...even given bad surprises...for the most part. Just my opinion.

:BigApplause:

My personal belief is that one can ignore reality and have it work against him/her or embrace it and have it work for you. since when is lengthy discussion such as with an important topic such as this a problem. I can tell by the nature of the posts that most are not acquainted themselves with the the detailed allegations in the IRS filings. I do not suggest that the IRS is correct but knowledge is power. So find out what this dispute is really about in detail.

I do not intend to sell my home and so I agree with others and do not view it as an investment as I did when moving around the country.

The issue for me is based in the wording of the IRS filings. It leaves me to ponder about many things. If the IRS prevails but not against the Developer then who will the IRS look to for repayment?

I do not know to whom nor do I know the amount but based on what is to have allegedly occurred, I will be livid if I am left with paying one red cent on top of what I pay now for the priviledge of living here.

I will continue my exploration of this issue in an unemotional and business-like manner. I do not believe the sky is falling. I do not believe it is an issue that should prevent folks from buying here. But I do believe in preparing myself, for weighing my options and for making a plan

Please search out the details of this debate. Ask questions when attending your Homeowner Association, the Amenities Advisory Commitee, District Meetings, etc. Two last points. Whenever someone rsponds to my question with "Don't even worry about it", then that's when I begin to worry because that is an artful dodger at work. Finally we are a part of this and we have a right to know...all of us.

for all of you Laura Richards haters - if it were not for her original articles we would nothing if anything about the irs tax-exempt bond investigation - this is probably the first mention of the investigation in the daily sun. i just looked back at some of old post on Laura Rchards -- she is a villager hater - she is jealous - she is not a journalist - on an on - well i would like to thank Laura Richards - i dont think anyone would know there was an investigation before her article - more kool-aid mom

irs tax exempt bond
 

I'm a wannabee and have a showing of my house this afternoon and can't wait to come to tv.
But after reading some of the comments be honest I have to think twice nowreason for is this.
Teir is a development near me that I am very familiar with, Their builder actually stole monies and scamed the subcontractors into cheating on the contents of the buildings they put up---so to make this short the irs sued the builder and got millions back but not enough and he went to prison just got out about six months ago and theirs found literaaly thousands of dollars in his home and he's back in jail again.
But what that did was cause the homeowners dues more than triple to take care of faulty building repairs they now have to fix and the homeowners are sueing the builder but their is nothing for them to get, so after eleven years thay cannot sell any of the homes because of the increase in dues and my friend whose mother in law had to relocate because of health problems is trying to sell her home for over a year now so they decided to just stop mortgage payments and lose the house.
I hope and pray this is not the same kind of problem at tv. because right now I can't wait to come down to tv.
If anyone feels this id the same situation down their please let me know

Russ: I have always considered you very informed. What do you think the worst, best, and most likely scenarios are?
JJ

Has the IRS asked the Developer for any kind of a settlement? NO!

Has the IRS asked any resident for any kind of a settlement? NO!

Do you think one day the IRS is going to show up at the resident’s door and say this is an IRS give me $10,000. I don’t think so.

For three years the IRS has had one target, Team Tutt AKA VCDD. What does the IRS want? Money what they always want and a stop to tax free bonds.

And when the IRS offender does not have the money to pay the IRS what happens then? The IRS says we will then take your property and auction it off to settle your debt. That property is the property that the VCDD allegedly wrongfully sold tax free bonds to purchase from the developer at an allegedly high price.

How do you stop tax free bonds? Redeem them, buy them back, with what money?

If I fully understand what you outlined in the Tier issue it is not quite the same issue as in TV.

You may want to speak with the sales reps at TV or perhaps the Presidents of the Villages Homeowners Association or the Property Owners Association for further information to ease any concerns you might have. Residents have found both Homeowner organizations to be helpful and accomodating

The IRS mission is to collect taxes, and if they determine that the bonds sold were not eligible for tax free status, it seems to me that their recourse is against the buyers of the bonds that did not pay taxes on the interest earned. If that came to pass, the bond buyers would then sue the bond sellers to recover their losses. That would be a very long lawsuit, and would draw in all the players that had a hand in creating and marketing the tax free bonds, including the developer, bankers, accountants and investment advisers. If it was found that the VCDD acted in good faith in selling the bonds, they would be the least culpable in this cast of characters.

Anyway, that's the way I see it.

Who is Laura Richards??

That would be my understanding of the issues as well. We do have people on this forum who have given their professional opinion on the bonds since that is what they do (did) for a living. Please search past posts on this issue and you'll see all sides and opinions.

It would actually be in the best interest of all current TV homeowners to get this issue settled sooner than later. That way the developer has more of a stake while there are still many thousands of homes to sell. But either way I would think the average homeowner in TV will be minimally affected if at all. But what the heck do I know:)

Pivo
 

Pivo:
Your story is the living finacial hell we all could go thru. I am certain this will drag out for years. Most of us will not live to see this settled. I consider my home here an investment. If I don't I should just rent. Many others consider there home here the same. If not we would have majority renters. There are many many wealthy people here. However there are also a great number of us that try to invest wisely. To improve and sustain our place in life. I personally would not cherish the thought of having to take large hit because of someone trying prosper on the backs of the home owners. When the IRS takes out after someone they usually win.
I would never ask a village sales person or the home owners association that is affiliated with the management. They are just trying to earn a living and will spew the same dog an pony show that management has instructed them to.
When there is a smoke screen like we are getting there is usually fire!

Thank you for putting some common sense into this.

The bigger threat to us is the national debt that those power-addicted, money-squandering, glad-handing boobs of both parties are getting us into in Washington.

I brought the IRS subject up to a TV sales lady that I had known for eleven years again 11 years and she had been in sales all that time. She told me that was very interesting and she had never heard anything about it. Another time I brought it up in conversation with a sales lady that I was talking to on a second occasion, she had no comment. Go figure.