Business Owner Pleads Guilty to Excise Tax Crimes and Fraud | AccountingWEB

Business Owner Pleads Guilty to Excise Tax Crimes and Fraud


By Terri Eyden
Jason W. Leas, a Minnesota resident and cofounder of Best Used Trucks of Minnesota Inc., is facing a potential maximum penalty of five years in prison for excise tax crimes and fraud. 
On June 11, the Justice Department and the IRS announced that Jason W. Leas, a resident of Crookston, Minnesota, and cofounder of Best Used Trucks of Minnesota Inc., plead guilty 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. Leas was charged by information filed on May 29, 2012. 
As alleged in the plea agreement, from 2004 through 2007, Best Used Trucks 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. 

Federal Excise Tax Info to Share with Your Clients


Types of excise taxes that affect businesses:
  • Environmental taxes ‒ domestic petroleum oil spills, ozone-depleting chemicals, etc.
  • Communications and air transportation taxes ‒ local telephone service, transportation of persons or property by air, etc. 
  • Fuel taxes ‒ diesel, kerosene, gasoline, petroleum, liquefied hydrogen, etc.
  • Retail taxes ‒ purchase of trucks, trailers, tractors, and semitrailer chassis and bodies. 
  • Ship passenger tax ‒ transportation by water.
  • Manufacturers taxes ‒ coal, taxable tires, gas guzzlers, vaccines, etc.
  • Foreign insurance taxes ‒ policies issued by foreign insurers.
  • Taxes on sportfishing equipment, outboard motors, bows and arrow shafts, indoor tanning services, etc.
  • Floor stocks taxes ‒ ozone-depleting chemicals.
  • Other excise taxes ‒ obligations not in registered form.
Due dates for federal excise tax returns:
  • January, February, March - Due by April 30
  • April, May, June ‒ Due by July 31
  • July, August, September - Due by October 31
  • October, November, December - Due by January 31
‒ Internal Revenue Service
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 as well as 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 to 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.
He also plead 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' 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.
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.
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