Play Meter

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IV
MIKE
IHIUI
IRS LOOKS AT OREGON OPERATORS • SUPREME COURT STAYS MARSHFIELD BAN • JOHN FRANn KILLED •
POLICE BESIEGE BAY COIN DISTRIBUTORS • KASSAR OUT AT ATARI • BILL WOULD LEGALIZE 'GRAY AREAS' •
BALLY SWOOPS DOWN ON COPIES • MURDER AT MALIBU GRAND PRIX • THE GREAT DART DEBATE • NCMI
NAMES OFFICERS • NEWBOROUGH OPENS U.S. OFFICE • COMPANY GOES FOR
NATIONAL ACCOUNTS • PAMMA SURVEY
IRS LOOKS
AT OREGON
OPERATORS
In an investigation designed to
uncover unreported incomes of coin
machine operators. the Internal Reve-
nue Service has determined only two
of 142 Oregon operators tiled correct
·
tax
According to Gary Gerhardt. man-
ager of the IRS compliance group in
Oregon. the operators tailed to comply
with a 1957 law that requires them to
tile a 1099 income report form tor each
location that produces more than 5600
in coin-op revenues. (The regulation
does not apply to locations with cor-
porate status.)
The investigation is part of an IRS
crackdown on unreported income.
Gerhardt confirmed. The coin machine
industry was selected tor examination
because "it's a cash operation and
easy to skim." he said.
12
Each operator who tailed to comply
is required to submit collection figures
tor each applicable location for the
last three years. These reports are
checked against the locations' records.
"Ninety-nine percent of them are
coming up with figures that don't
match." complained Beaver Amuse-
ment's Chet Thompson. He said IRS
criminal investigators are examining
his records to determine it he can be
charged with criminal intent to hide
collections.
"In a lot of cases. I just had to guess."
he said. "More than a third of my loca-
tions have changed hands. I was
totally unaware," Thompson. who
described himself as a "scared turkey."
said. "I just didn't keep good books."
Operators can be tined $50 tor each
1 099 not tiled. But. Gerhardt stressed.
each case is considered individually
to determine whether the taxpayer
had "reasonable cause" not to file.
Ordinarily. said Gerhardt. a lack of
awareness of the regulation is not con-
sidered a reasonable cause.
"A lot of operators are saying. 'I
didn't know."' Gerhardt told Play
Meter. "But most of them have tax
advisors who should have known
about the law."
Gerhardt said the decision to exam-
ine the coin machine industry was
made by district management. but
that he would recommend to an IRS
regional office that other districts
nationwide examine the industry for
unreported income.
He noted that as of July 14. 3.200
1099 forms representing $12.9 million
in coin-op income had been processed
because of the investigation. but that
the IRS has made no conclusions
whether any operators are guilty of
criminal intent to deceive the govern-
ment.
•
SUPREME COURT
STAYS
MARSHFIELD BAN
For now. the U.S. Supreme Court has
prevented the town of Marshfield.
Massachusetts. from enacting its ban
on coin-operated video games.
Marshfield merchants appealed
their case to the U.S. Supreme Court.
and the stay was issued while the court
considers whether the case warrants
their review.
The court acted the day the ban was
to be imposed. July 11. It postponed
the effects of a June 13 Massachusetts
Supreme Court ruling that said the
ban did not violate Marshfield mer-
chants' rights to operate videos. (Play
Meter. August 15. p . 20)
"The mere fact Justice Brennan
issued the stay indicates he feels there
is a federal question involved that
warrants further study," said Leo Droste
of the Amusement and Music Opera-
tors Association. Droste also announced
PLAY MET£R. September 1. 1983