The MicroStrategy chairman and Bitcoin evangelist is the first person targeted under a Washington, D.C., whistleblower program for income tax evaders.
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Bitcoin evangelist Michael Saylor is going to remain the subject of the Washington, D.C., attorney general's first tax evasion lawsuit.
On Feb. 28, a judge declined a bid by Saylor and MicroStrategy to dismiss the complaint, meaning they could be on the hook for as much as $100 million.
The suit was brought last August by Washington, D.C.'s former attorney general, Karl Racine. It argues that despite claiming to be a citizen of Florida, the billionaire has actually lived in the nation's capital for 15 years and owes more than $25 million in back taxes. Racine resigned in January, and was replaced by Brian Schwalb.
Adding penalties and the potential for triple damages, Saylor could end up owing more than $100 million, MicroStrategy said in a filing with the Securities and Exchange Commission.
Saylor turned his enterprise business intelligence software firm into a de facto Bitcoin exchange-traded fund in August 2020. It had bought 132,500 BTC as of the end of the year. As of March 2 that's worth about $3 billion, and the company is believed to have spent $4 billion purchasing them — a loss that doesn't bother him, he told CoinMarketCap Academy last year.
"If you look at all the richest people in the world, they're not traders. I mean, Bill Gates, Jeff Bezos, Elon Musk, Mark Zuckerberg, Larry Page… name the person who traded their way to that situation. You can't really do it. Trying to time the market is ridiculous."
A devout HODLer and Bitcoin maximalist, Saylor has said "Bitcoin is a commodity, not a security," adding that the "BTC network is an open protocol, offering utilitarian benefits similar to roads, rails, radio, telephone, television, internet, or English."
The First Target
The D.C. lawsuit comes as the result of the False Claims Act, a whistleblower law the District of Columbia enacted in March 2021. The law allows whistleblowers to be awarded 15% to 30% of the amount recovered — meaning the person who sued Saylor could be up for as much as $30 million.
In an August statement, Attorney General Racine's office alleged that:
"MicroStrategy had detailed information confirming that Saylor was in fact a DC resident, but instead of accurately reporting his address to local and federal tax authorities and withholding DC taxes, collaborated with Saylor to facilitate his tax evasion."
Specifically, the release said, Saylor "has publicly called the District's Georgetown neighborhood home since about 2005. He lives in a 7,000 square foot penthouse on the Georgetown waterfront and has docked at least two of his luxury yachts in the District for long periods of time."
Saylor, on the other hand, said Miami is where he lives, votes and performs jury duty, telling CNBC it is "the center of my personal and family life."
For its part, Washington, D.C., considers anyone who spends 183 days in the district a full-time resident for its substantially-higher-than-Florida's income tax purposes. On bringing the suit, Racine said:
"D.C. residents and their employers are now on notice that attempts to evade the District's income tax laws by falsely claiming that they reside in another jurisdiction will be investigated and, if substantiated, held accountable."
