Property lien placed by Department of Revenue against Brooten Commercial Club

The Brooten Commercial Club has had a property lien placed against it by the Minnesota Department of Revenue (MN-DOR). The total amount owed for the organization's unrelated business income tax (UBI) is $17,967.63. The BCC had a charitable gambling operation that incurred UBI (that remains unpaid) during the calendar years 2017 ($270.99) and 2018 ($17,696.64).

In a letter dated December 31, 2020, MN-DOR said, "We are filing a state lien on you and your property for unpaid debt."

The letter goes on to state that a property lien is filed on all property and property rights belonging to the debtor for the amount of unpaid principal plus penalties and interest. The property lien has been filed with the Minnesota Secretary of State.

As an organization, the BCC holds no property and has no active bank accounts. On July 18, 2019, the remaining funds in its bank accounts totaling $3,902.82 were confiscated by MN-DOR and applied to what was at that time over $63,000 of debt owed to the state. Its accounts were subsequently frozen with no money in them.

On January 30, 2020, a check payment of $46,016.73 was posted to the BCC's state debt from a yet-to-be-named source. On March 16, 2020, a check payment of $207.07 was made by another undetermined source.

MN-DOR previously told the organization in 2019 in writing that "Personal Liability" would be assessed upon any or all of the group's officers who were in direct control of its charitable gambling operation, which was shut down on approximately December 17, 2018. MN-DOR uses what is called an Order Assessing Personal Liability to do this. Personal liability can be assessed at any time on officers and directors, managers, treasurers and financial secretaries, accountants and bookkeepers and any supervisors or employees who write checks for a business, decide whether to file tax returns and pay debts, hire and fire employees, control the business's financials or have an entrepreneurial stake in the business.

To read more about this tax mechanism, click here (short link):

In addition to the money owed to the state of Minnesota, the Brooten Commercial Club also owes the federal Internal Revenue Service at least $34,000. This debt was accrued after former gambling manager Michelle Halls failed to pay over $8,000 per quarter in 2018 for federal taxes on the group's charitable gambling operation. Those four payments totaled over $34,000. Up to an additional $4,000 has been assessed from late penalties, although that extra amount may not stay in place depending on how the $34,000 is paid.

As gambling manager, Minnesota's charitable gambling manual states that it was Michelle Halls' legal responsibility to both make sure those payments were made in a timely fashion and also communicate with the BCC membership that timely payments were not being made in March 2018, June 2018, September 2018 and December 2018. However, no record exists that any of that happened.

Halls resigned effective December 31, 2018 after over 25 years of holding the title of gambling manager.


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