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Mark Stodghill, Forum News Service, Published June 06 2013

Minn. tax preparer charged with failing to file his own returns

AITKIN, Minn. - An Aitkin tax preparer who completed 2,400 income tax returns for others between 2005 and 2009 has been charged with six felony crimes for failing to file his own tax returns.

Todd William Sterling, 44, of Aitkin Tax Service Inc. is charged in State District Court with failure to file tax returns in 2006, 2008 and 2009, and three counts of failure to pay taxes in 2006, 2008 and 2009.

Each of the charges carries a maximum potential penalty of five years in prison and a $10,000 fine.

The charges were brought after an investigation by the Minnesota Department of Revenue. The revenue department said that Sterling told investigators he had prepared tax returns for 20 years and understood the filing requirements.

The complaint alleges Sterling evaded paying at least $5,383 in Minnesota income tax. If convicted he also faces fraud penalties and interest due.

A message left at Aitkin Tax Service on Wednesday wasn’t returned. Sterling is being represented by Brainerd attorney Charles Frey. Frey said his client was declining comment at this time.

According to the criminal complaint, Sterling told an investigator that he was not a CPA, but had received schooling as an accounting clerk and had been preparing tax returns for 20 years. He said he prepared about 400 to 500 tax returns annually and charged an average of $125 per return.

The revenue department said that records indicated that Sterling was the owner/officer of two corporations, Aitkin Tax Services Inc. and ATS Inc. of Garrison, Minn. ATS is no longer an active business.

Department of Revenue records also indicated that Sterling had been employed at Western Fabrication and earned income in excess of the minimum filing requirements.

An investigator obtained Sterling’s personal and business account records from the First National Bank of Deerwood and determined that $425,325 was deposited in the accounts between 2005 and 2010, during three of the years he is accused of not filing returns.

The defendant filed a 2007 individual income tax return, which showed he had sole-proprietorship gross receipts of more than $75,000 from a consulting business, and sole-proprietorship gross receipts of more than $13,000 as a fishing guide. He also reported rental income from a property in Aitkin.

An investigator obtained IRS wage and income transcripts for Sterling that detailed gross income of $18,073 in 2008 and $55,840 in 2009, but the transcripts did not show income from the defendant’s tax preparation business.

Sterling’s next court appearance is scheduled for July 8 in State District Court in Aitkin.

The Minnesota Department of Revenue has a 24-hour fraud tip line for anyone who suspects an individual or business of violating tax laws. The phone number is (651) 297-5195 or (800) 657-3500. Tipsters can remain anonymous and can also e-mail the department at tax.fraud@state.mn.us.

In 2012, citizen tips resulted in 80 percent of the department’s criminal case referrals.