Henderson councilman may still owe millions to IRS

And he still might.

Tax records show that in 2015, the Internal Revenue Service re-filed liens against Shaw totaling nearly $2.4 million. The following year, the government partially revoked a release from another lien, reiterating that he was on the hook for more than $400,000.

The councilman’s financial woes have been publicized, but the extent of the problems was never made clear.

Shaw was the chairman and majority owner of VSS Enterprises, then-owner of the Castaways casino, previously known as the Showboat, located on East Fremont Street. The building was imploded in 2006. His debt to the IRS comes from the company’s failure to pay income, Medicare and Social Security taxes from employee wages at the Castaways in 2002 and 2003, records show.

“When the company failed the IRS was given every opportunity to collect all of (their) funds due (to) them from the available cash,” Shaw said in a text message to the Las Vegas Review-Journal. “They (chose) not to do that.”

Legal history

The government argued Shaw was responsible for collecting, accounting for and paying the taxes from employee wages, according to records from a lawsuit filed in 2007. It targeted Shaw “for his willful failure to collect, truthfully account for, and pay over the withheld income and (Federal Insurance Contributions Act) taxes” from the company’s employees.

Although he denied responsibility and liability, Shaw agreed to pay more than $3.2 million to the IRS in 2011. His counterclaim against the government was dismissed with prejudice, meaning the judgment was final and his complaint cannot be refiled.

“I had to stop the ongoing legal fees and harassment,” Shaw wrote to the Review-Journal. “That was the best way to do it.”

He was not alone in having to pay the government. James Vanwoerkom agreed to pay $600,000 and Joseph O’Brien agreed to pay more than $3.6 million in the lawsuit. Michael Villamor was required to pay more than $3.6 million.

Shaw maintains that he was an investor in the company, but was not involved in management. In 2003, the Review-Journal reported Shaw’s testimony that he fronted personal money to the casino cage before weekends. He loaned VSS $16 million to cover the 2000 cost of buying the property, according to that 2003 Review-Journal story. Shaw told the state Gaming Commission at the time of the purchase that “If I have to double or triple my investment, I’ll do it,” the story reported.

Shaw said Thursday that he disputes the government’s right to come after him, and that he has attorneys handling an out-of-court dispute with the IRS.

Shaw was appointed to the Henderson City Council in 2017 to fill the Ward 2 vacancy when Debra March was elected mayor. His appointment drew criticism from some because of his close ties with council members.

He won reelection in April with about 83 percent of the vote, but did not face a serious challenger.

Problems not over

He initially claimed he had no liens because they had all been paid, but that assertion is only accurate when looking at taxes he filed on his own behalf, not business-related taxes. All of the IRS liens for personal taxes filed against him between 2006 and 2007, totaling more than $1.75 million, have been released.

Shaw said he has been making payments to the IRS, but the amount he still owes is unclear. He estimates he owes “slightly less” than $2 million, but is unsure of the amount.

But his troubles with the IRS apparently are not over.

At a public Henderson workshop in November, Shaw can be heard in a recording during a break talking about additional money he owes the IRS. With penalties and interest, Shaw was notified that he owed $6,000 from 2002, he said.

“How can they do that?” the mayor asked him.

“Just don’t ever piss them off,” Shaw responded.

Ward 3 Councilman John Marz patted Shaw on the back. “Well, Dan, if you’d pay your taxes,” he said, “you wouldn’t have these bills.”

Contact Blake Apgar at bapgar@reviewjournal.com or 702-387-5298. Follow @blakeapgar on Twitter.