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A Tribute to Whistleblowers: Bitcoin Billionaire to pay $40 Million to Settle Tax Evasion Suit

Michael Saylor, the billionaire bitcoin investor, will pay a record $40 million to settle allegations that he defrauded Washington D.C. by falsely claiming he lived elsewhere to avoid paying D.C. taxes. The suit – discussed in of one of our previous blogs – was originally brought by a whistleblower, Tributum, LLC., and the D.C. Attorney General intervened in the lawsuit in 2022. The settlement marks the largest income tax fraud recovery in Washington D.C. history.

Though Saylor claims he has lived in Florida since 2012, the suit alleged that Saylor actually resided in a 7,000-square-foot penthouse, or on yachts docked on the Potomac River in the District of Columbia. Furthermore, the Attorney General alleged that from 2005 through 2021, Saylor paid no income taxes. Saylor first improperly claimed residency in Virginia to pay lower taxes, then created an elaborate scheme to feign Florida residency to avoid income taxes altogether, as Florida has no personal income tax. Court filings state that MicroStrategy, Saylor’s company, submitted falsified documents to prove his residency.

According to a court filing, MicroStrategy kept track of Saylor’s location, and those records show that he met the 183-day residency threshold for D.C., meaning he was obligated to pay income taxes to the District. As we mentioned in our previous blog on the case, the complaint summarizes this tax fraud scheme as “depriv[ing] the District of tens of millions of dollars or more in tax revenue it was lawfully owed, all while Saylor continued to enjoy the full range of services, infrastructure, and other fruits of living in the District.” Despite this, he allegedly made bold claims to his friends, “contending that anyone who paid taxes to the District was stupid,” according to the Attorney General.

About the case, the D.C. Attorney General further stated that “No one in the District of Columbia, no matter how wealthy or powerful they may be, is above the law.” Holding even evasive billionaires accountable is an important part of keeping the integrity of our systems intact and ensuring that we all pay our fair share. Under the District of Columbia False Claims Act , private citizens can report tax evasion schemes , while the federal False Claims Act has a “tax bar,” so tax fraud is not actionable under that law. The IRS Whistleblower program instead offers recourse.

In addition to the $40 million settlement, Saylor has agreed to comply with D.C. tax laws. The amount of the whistleblower award in the case is still being determined, but whistleblowers are entitled to 15-25% of the government’s recovery in a qui tam False Claims Act settlement.

© 2024 by Tycko & Zavareei LLP
by: Tycko & Zavareei Whistleblower Practice Group of Tycko & Zavareei LLP

For more news on Cryptocurrency Tax Evasion Settlements, visit the NLR Criminal Law & Business Crimes section.

The post A Tribute to Whistleblowers: Bitcoin Billionaire to pay $40 Million to Settle Tax Evasion Suit appeared first on The National Law Forum.