Leaders of Constellation Brands in dispute with IRS
By: WROC-TV
Updated: September 7, 2007
Two of the area's most prominent businessmen may be in trouble with the IRS.
Robert and Richard Sands head Constellation Brands in Fairport.
That's the largest wine and spirits company in the U.S. In fact it seems you can't buy a bottle of wine without the Constellation name being attached to it in some way.
But, now the Sands brothers and their families are embroiled in a dispute over taxes.
But tonight the sands brothers--and their families--are embroiled in a dispute over taxes...
The lawsuit is more than a year old and it has to do with tax returns the Sands families filed in 2001 and 2002.
Robert and Richard Sands sued the IRS, saying the agency did not interpret their returns correctly and made the brothers pay $18.2 million in taxes and penalties.
A year later, there's a new fold in this lawsuit. The IRS says the Sands purposely avoid paying their taxes and there's evidence to prove it.
The case revolves around an entity in Texas called the "Heritage Organization".
It was a Texas-based firm which set up tax shelters for the Sands, along with several other wealthy families across the U.S. But, the IRS calls Heritage a sham agency, set up directly to help people move money around specifically to avoid capitol gains taxes.
According to court documents the IRS says the Sands avoided capitol gains taxes on approximately $125 million.
Heritage went bankrupt in 2004.
While the sands claim they invested in the firm without knowing the true intent of the tax shelters. The IRS says differently.
Its lawyers say they have proof Robert and Richard sands knew they were investing in the sham agency specifically to avoid paying taxes.
Taped conversations between the Sands and Heritage officials were submitted as evidence recently.
In the first phone conversation with Richard Sands: Sands questions whether their investments will be eliminating capital gains tax entirely.
The lawyer for the Sands, Thomas Cullinan, issued this statement to News 8 Now. "The government has made a series of highly inflammatory and conclusory statments as a tactic to further its position. The Sands strongly disagree with these statements."
Cullinan says these lawsuits deal only with the family. They have nothing to do with the Constellation business.
He plans to file a rebuttal to the IRS new claims early next week...
