DOJ
decides not to fight Vigilant over
tip jars
Emily
Salmon
The
Department of Justice will let stand
a court decision allowing the
Vigilant Hose Co. to keep from
paying taxes on its tip-jar
earnings.
Robert
Branman, the trial attorney
representing Tax Division of the
Department of Justice, said
Wednesday that the DOJ would no
longer pursue its appeal in the U.S.
Court of Appeals for the Fourth
Circuit.
The
government was contesting a May 2001
decision in the U.S. District Court
of Maryland (Baltimore) allowing the
fire company to keep its earnings
tax-free.
In
February 2000, the Vigilant Hose Co.
had filed suit against the DOJ in
the U.S. District Court of Maryland
(Baltimore), claiming it should not
have been required to pay $37,621 in
taxes on tip-jar earnings from the
fiscal years 1995 and 1996.
The
issue, Branman said, was whether
income from tip jars was
"substantially unrelated"
to the fire company's tax-exempt
status. If so, then it would be
taxable like income of any other
business.
Tip
jars are a legalized form of
gambling in Frederick County, and a
popular fundraiser for nonprofit
organizations. Patrons buy tickets
at local establishments such as
taverns. Tickets with winning
numbers earn the patron a cash
prize.
In
May of this year, the District Court
ruled in favor of Vigilant Hose,
ordering the government to repay the
taxes plus interest. The government
then filed an appeal in July 2001.
David
R. Cohan, the Baltimore attorney who
represented Vigilant Hose, said
Wednesday he was pleased with the
decision.
"The
whole existence of the fire
department depends upon
contributions," which is why
Frederick County drafted legislation
permitting tip jars, Cohan said.
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