Would a private prison company mislead the government to avoid paying taxes? According to New Mexico, that’s what CoreCivic did when it requested and received a multi-million dollar tax refund for housing federal inmates within the state. Article here.
The scheme uncovered by New Mexico involved the mechanism used to house federal inmates.
Rather than admitting that it provided a taxable service by housing federal inmates, CoreCivic claimed instead that it sold a license to house inmates, which the federal government then purchased. Because the sale of a license is tax-exempt, CoreCivic claimed that it owed no money to the state.
However, the scheme began to unravel when New Mexico discovered how the federal government was making payments. Rather than purchasing a license, as CoreCivic claimed, the federal government made payments directly to CoreCivic.
By making direct payments to CoreCivic, the argument that the federal government was purchasing a license began to fall apart.
So how much money did CoreCivic attempt to fleece from New Mexico taxpayers? According to the state, the total cost, with interest and penalties, now exceeds $3.6 million dollars.
If you have questions about private prisons, their liability for cost-cutting measures, or how they operate, contact the injury attorneys at Bryan & Terrill, 918-935-2777 or in Colorado, 970-736-7171.