- The DC attorney general has confirmed that his office is going after Bitcoin maximalist Michael Saylor and his company Microstrategy for tax evasion.
- These charges come just weeks after Saylor stepped down from his CEO role to focus on the company’s Bitcoin acquisition.
Barely a month since Michael Saylor stepped down as CEO of Microstrategy, the DC Attorney General has sued the Bitcoin bull over alleged tax fraud.
In a plaint filed in the Supreme Court of the District of Columbia on August 22 but disclosed on Wednesday, AG Karl A. Racine claimed that Saylor had evaded paying up $25 million in income taxes despite living in the district for more than a decade and raking in millions from his business ventures. To try and obfuscate the fraud, Racine claimed that Saylor purchased several million-dollar homes in states with lower tax rates including a vacation house in Florida all the while misrepresenting his place of aboard. Under DC law, any individual is subject to District tax liability if they are domiciled in the District, or if they establish statutory residency in the District.
“For nearly a decade, Saylor has been engaged in a fraudulent scheme to deprive the District of tax revenue on hundreds of millions of dollars in income that he earned while a resident of the District by falsely claiming to be a resident of Florida.” Read the claim.
Saylor has been domiciled in the District, or a statutory resident of the District, or both, in each year from 2013 through 2020
To support his assertions, the AG claimed that Saylor has on previous occasions flaunted his billionaire lifestyle and bragged about his plan to evade paying taxes to DC by creating an illusion of residing in Florida. Further, he claims that Saylor had bragged in January 2021 that Bitcoin was the ideal tool for evading tax, suggesting that Bitcoin owners should not pay taxes.
The lawsuit also alleges that Microstrategy also conspired to help Saylor, by posing faltering financial performance in a bid to help him adjust his compensation and avoid tax withholding disputes. AG Racine Tweeted;
With this lawsuit, we’re putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable.
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This will also become the first lawsuit to be brought under the DC False Claims Act which was recently amended. According to the act, any person who makes a false or fraudulent claim on income is liable for a civil penalty in the range of $5000 to $11000 per false claim. Saylor’s alleged tax fraud could thus attract over $100 million in penalties given that the said evasion dates back to 2013.
Apart from the nearly 18,000 BTC that Saylor disclosed personally owning in early 2021, Microstrategy currently holds 129,699 BTC which are valued at roughly $362million and $2.6billion respectively. Despite suffering a devastating drawdown due to the ongoing crypto market meltdown, still, the AG’s office is likely to stop at nothing when coming to claiming its dues.