Montana tax board rules against onetime billionaire as state seeks $73.8M in back taxes

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FILE - In this April 29, 2009, file photo, Tim Blixseth arrives at the federal courthouse in Missoula, Mont. Montana revenue officials say the one-time billionaire and Yellowstone Club founder owes almost $74 million in back taxes, penalties and interest, primarily on a $375 million loan to the luxury resort near Big Sky that he diverted for personal use. Department of Revenue officials announced Tuesday, March 24, 2015, that a tax board had sided against the real estate mogul in a series of recent rulings after Blixseth challenged the state’s tax claims. Blixseth says he will appeal the tax board decisions in state court. (AP Photo/Mike Albans, File)


BILLINGS, Montana — One-time billionaire and Yellowstone Club founder Tim Blixseth owes almost $74 million in back taxes, penalties and interest in Montana, state revenue officials said Tuesday, after a tax board ruled that the real estate mogul diverted huge sums from the luxury resort for personal use.

Revenue officials said the Washington state resident and his former wife misappropriated more than $270 million from a 2005 Credit Suisse loan to buy luxury cars, jets and high-priced properties in Mexico, Scotland and elsewhere. Taxes also were assessed for unreported income during 2002 to 2004 and 2006.

Blixseth said the purchases were legitimate business expenses as he sought during the last decade to expand the Yellowstone Club ski and golf resort near Big Sky into an international club for the ultra-wealthy.

But the Montana Tax Appeal Board said in a series of rulings in recent months that Blixseth had failed to make his case.

"It is ... the taxpayer's burden to show that the expenses are the ordinary and necessary expenses of carrying on a trade or business," board members wrote. "We find that Mr. Blixseth has not met that burden."

Blixseth told The Associated Press that he plans to appeal the rulings in state District Court and to file lawsuits against officials involved in the case.

"The (Department of Revenue) tax bill is as fabricated as my misappropriating money from my former company," Blixseth said in an email.

In 2009, when the case began, Blixseth was assessed $56 million in unpaid taxes, penalties and interest.

The amount owed had increased to $73.8 million by Tuesday as interest rate charges continue stacking up at a rate of 12 percent annually, said Montana Department of Revenue Chief Legal Counsel Dan Whyte.

Even if the state prevails should the case go to court, it's uncertain when or how the money will be collected.

"He's been fighting us the entire way, so that's not really something I can speculate on," said Department of Revenue spokeswoman Molly Petersen.

Blixseth's attorneys have said he spent most of his once-vast fortune on legal fees and other expenses. Separately from the state's case, creditors from the Yellowstone Club's 2008 bankruptcy are seeking to collect on $241 million in civil fraud judgments against Blixseth.

The legal maneuvering in that case briefly landed Blixseth in jail in December when he was found in contempt of court by U.S. District Judge Sam Haddon for failing to turn over financial documents related to the sale of a luxury property in Mexico.

Blixseth's ex-wife, Edra, was also named in the original Montana tax assessment. She declared personal bankruptcy in 2009 and was forced to sell her assets while the state's tax case was pending. State officials have said they would seek to collect from her, too, if she comes into more money.

The Yellowstone Club emerged from bankruptcy in 2009 when it was bought by CrossHarbor Capital Partners of Boston for $115 million.

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