The state pays its small team of executioners in cash to limit the paper trail. The state isn’t sending proper paperwork to the IRS — experts told BuzzFeed News that it could be contributing to tax evasion.

Illustration by BuzzFeed News

Shortly before each execution in Missouri, a high-ranking corrections official takes envelopes filled with thousands of dollars in cash to the state’s executioners. The cash limits the paper trail — and helps keep the identities of the executioners hidden. Most of the envelopes are filled with hundred-dollar bills. And on the outside, the envelopes carry instructions: They aren’t to be opened until “completion of services rendered.” The executioners are given pseudonyms to protect their identities: M2, the nurse, gets $2,400, while M3, the anesthesiologist, gets the envelope marked $3,000. M7, the drug supplier, gets the most, an envelope filled with $7,178.88. Missouri Director of Adult Institutions David Dormire has handed out nearly a hundred envelopes filled with cash since November 2013. Over that span of time, Dormire delivered $284,551.84 in cash to the small group of individuals who help the state carry out the death penalty, according to a BuzzFeed News review of receipts, an audit of the payments, a spreadsheet showing cash withdrawals, and memos marked “confidential” in which the payments were discussed. “It seems very strange to me,” said Sandy Freund, a law professor at Rutgers School of Law-Newark. “How could they possibly be paying in cash? That seems so ridiculous.” In fact, several experts who spoke with BuzzFeed News said the state’s methods raise serious questions about whether the state has followed federal tax law. The Internal Revenue Service requires those who pay contractors $600 or more to file a disclosure called a 1099 with the agency, as well as with the person receiving the money. The disclosures notify the IRS that the agency should be checking to make sure the recipient is paying taxes on those payments. But in response to a BuzzFeed News open records request, the Department of Corrections said it had no records about 1099s for the executioners. The department’s internal procedures make no mention of 1099s or any other notice to the IRS.

via Missouri Department of Corrections / Via doc.mo.gov David Dormire

Dormire, who handles the cash payments, said in a 2014 deposition that he was unaware of any 1099s being issued to the executioners or the IRS. “You provide the Internal Revenue Service with proof they’ve been paid, do you not?” an attorney representing death row inmates asked him. “I do not know,” he responded. The Department of Corrections was given more than 24 hours to respond to a request for comment, which it did not do. A spokesperson said only that the department was reviewing the inquiry. Without informing the IRS that the state is handing out this amount of cash, the federal government has no way to ensure that the recipients are paying taxes. Experts BuzzFeed News spoke with said Missouri could be contributing to considerable tax evasion. “I can’t imagine why the state wouldn’t be issuing 1099s here,” said Bryan Camp, a former IRS employee who is now a law professor at Texas Tech. “I can’t think of a good answer.” Freund echoed that, adding that she saw no exception that would exempt the state from issuing a 1099 in these circumstances. The penalties for the state not issuing 1099s are relatively modest, the experts said — starting at $100 per 1099. But it can add up, especially if the violation was intentional. Another expert BuzzFeed News spoke with said he recently had advised a government entity that the IRS had assessed a penalty of more than $800,000 for not issuing 1099s. These would be penalties for the state. But there are other penalties for the recipient if they did not disclose the cash payments to the IRS and pay taxes on them. Without a 1099, however, the IRS would not have a way to check if the recipients had paid their taxes. “If they aren’t state employees, then they should be receiving 1099s,” Thomas Brennan, a law professor at Harvard who specializes in tax law, said bluntly. Questions about the cash payments have been raised before. A February 2015 audit by the Missouri Auditor’s Office found that the Department of Corrections was not following its procedures for cash payments. “The DOC did not record the amount of the cash payments on receipt forms signed by execution team members and did not always require the exchange of the cash payments to be acknowledged by a witness signature, as required by DOC procedures,” the audit found. That audit dealt with a small portion — $21,266 — of the cash that the Department of Corrections dispensed between March 2013 and February 2014.

“I can’t imagine why the state wouldn’t be issuing 1099s here.”

An auditor that worked on the case told BuzzFeed News that they did not check to see if 1099s were being issued. Dormire told the auditors that the problems the auditor found were “an oversight,” and the Department of Corrections said it would enact stricter guidelines to ensure compliance. But “confidential execution team member receipts” from well after the audit still show discrepancies. Some are lacking a witness signature, others are entirely blank, and many of the witnesses signed the receipts on different days than Dormire. The Department of Corrections has not provided any explanation of the discrepancies. In a brief statement, Auditor Nicole Galloway said that “it is the expectation of this office that audit recommendations are implemented.” She also pointed to other audits that have criticized government agencies for not issuing 1099s. Galloway was appointed by Gov. Jay Nixon in April 2015 and, as such, did not oversee the Department of Corrections audit. Nixon also appointed the head of the Department of Corrections, George Lombardi. Nixon’s office declined to comment on this story, instead directing questions to the Department of Corrections. Lombardi defended paying the executioners in cash before a state legislative committee on government oversight in 2014. The committee did not ask about tax issues. The top corrections official appeared frustrated that he had to appear before the committee. At the time, he was facing questions over the state’s practice of executing inmates while appeals were still pending in the courts, as well as the purchase of execution drugs from a pharmacy that was not licensed to sell in the state. “Yes, it is cash money,” Lombardi told the committee. “They’ve made it clear that we wouldn’t have the people required to carry out the death penalty” if it wasn’t cash. Lombardi is the person who signs off on the procedures governing the cash payments, and he said it has been longstanding policy to pay those who participate in executions in cash. In a statement, Attorney General Chris Koster’s office said, “By law, we are charged with representing the Department of Corrections, and so we decline to comment.” Missouri is not the only state that pays its executioners in cash. BuzzFeed News has found evidence that, at the least, Arizona and Oklahoma do as well. Arizona, though, has provided 1099s in conjunction with its executions. The state turned over redacted 1099s as part of ongoing litigation. The state’s medical team leader, who was paid $18,000 per execution, also said in a deposition that Arizona gave him a 1099.

via Arizona Department of Corrections

Oklahoma uses cash payments as well — but in that state, the payments are much smaller. Each executioner in Oklahoma is paid only $300 per lethal injection. One doctor complained about his compensation for the 2014 botched execution of Clayton Lockett, a 43-minute lethal injection in which the inmate writhed and sat up on the gurney. Even though that execution was botched, and a second one scheduled for that night wasn’t carried out, the doctor was paid $600 — the price for both. “Well I know the doctor was” paid for both, then-Warden Anita Trammell told investigators afterward. “‘cause [redacted] got blood all over his jacket and I mean, it was a bloody mess. [Redacted] was complaining about that. [Redacted] says [redacted] gotta get enough money out of this to go buy a new jacket.”