December 6, 2011
Texas investor found guilty of tax evasion
An apparent misunderstanding has a Schertz, Texas, real estate investor facing probation after being found guilty of tax evasion in another state.
The 73-year-old man owned National Real Estate Traders Inc., which operated in the St. Paul, Minnesota, area for many years. Investigators determined that the man and his wife had not paid tax on the income generated from the business and had not filed income taxes since 1996. The man countered that he did not report income or file taxes because he only received Social Security.
After he and his wife were charged with five felony counts of failing to file a Minnesota state tax return, they apparently fled their home on Mississippi Boulevard and settled in Texas. In mid-November the husband pled guilty to two of the felony charges and the rest were dismissed. All charges against the wife were dismissed as part of a plea deal. The man was also granted a stay of imposition, which means if he follows all the terms of his five-year probation, the felony charges will be reduced to misdemeanors. He was sentenced to 100 days in prison, but since he was given credit for time already served in jail, he was not required to serve any additional time and was released to probation.
The tax code of each state is complex and difficult to understand, which can lead to innocent taxpayers making small mistakes that can end up costing them jail time or a fortune in fees and back taxes. The apparent belief that he was not required to file taxes on the income generated by his real estate business could have cost him additional prison time in this case. An undoubtedly vigorous defense fortunately resulted in probation, a dismissal of the other three charges against him, and his wife was able to escape all charges. Texas residents facing similar allegations would do well to prepare a thorough and meaningful defense aimed at acquittal or other favorable resolution of all outstanding allegations.
Source: St. Paul Pioneer Press, “Former St. Paul real estate investor sentenced for tax evasion,” Emily Gurnon, Nov. 19, 2011 (cited from Westlaw.com)