Monday, June 11, 2012
Minnesota Business Owner Pleads Guilty to Federal Excise Tax Crimes and Tax Fraud
Jason W. Leas, a resident of Crookston, Minn., and co-founder of Best Used Trucks of Minnesota Inc., pleaded guilty today to one count of failing to pay federal excise taxes, one count of failing to file a federal excise tax return and one count of filing a false individual federal income tax return for tax year 2007, the Justice Department and Internal Revenue Service (IRS) announced. Leas was charged by information filed on May 29, 2012. He entered his plea of guilty before U.S. District Court Senior Judge Richard H. Kyle in Duluth, Minn.
As alleged in the plea agreement, from 2004 through 2007, Best Used Trucks, which is located in Crookston, was a farm truck dealership that bought and sold used trucks, new trailers, new grain boxes and other heavy farm equipment, primarily to farmers throughout the Red River Valley of Minnesota and North Dakota. Beginning in 2004 and continuing through 2007, Leas and Best Used Trucks purchased and imported new end dump trailers, grain boxes, and gravel boxes from a Canadian manufacturer, which subjected the company to federal excise taxes upon selling them afterward. Leas admitted that he knew of his responsibility for paying the 12 percent federal excise tax on the sale of these trailers and related equipment, and his responsibility to file federal excise tax returns. Leas pleaded guilty to failing to file an IRS Form 720, Quarterly Federal Excise Tax Return for the third quarter of 2005, and failing to pay federal excise taxes of $9,636 for the first quarter of 2006. Leas admitted that he failed to pay over at least $80,088 in total federal excise taxes for ten quarters from 2004 through 2006.
Leas also pleaded guilty to willfully filing a false individual federal income tax return for the tax year 2007, which failed to report at least $120,151 in additional income with an additional tax due and owing of at least $36,872. The plea agreement alleged that from 2004 to 2007 Leas controlled two checking accounts in the name of Best Used Trucks of Minnesota. Leas used one of these accounts to both divert corporate receipts from Best Used Trucks, and to buy and sell equipment that was not part of Best Used Trucks’s ordinary business sales. Leas failed to report this income on his personal tax returns for four years, resulting in a total tax loss of at least $73,361.
“To build faith in our nation’s tax system, honest taxpayers need to be reassured that everyone is paying their fair share of taxes, whether it is in the form of income taxes or excise taxes,” said Kelly R. Jackson, Special Agent in Charge of the IRS Criminal Investigation Division, St. Paul Field Office. “The IRS-Criminal Investigation Division, together with the Department of Justice, will continue to investigate and prosecute those who violate our tax system.”
Leas is facing a potential maximum penalty of five years in prison for all three charges; three years for willfully filing a false income tax return, and one year each for the failure to file and failure to pay charges.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, thanked Special Agents and Revenue Agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Trial Attorneys Thomas W. Flynn and Dennis R. Kihm, who prosecuted the case.
