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Tax preparer ordered to pay more than $18,000 for unpaid taxes

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Tom Olsen | Forum News Service

AITKIN, Minn. -- An Aitkin tax preparer who completed thousands of tax returns for others over a 20-year period must pay more than $18,000 to the state, after admitting that he failed to file his own tax return.

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Todd William Sterling, 45, pleaded guilty in State District Court in Aitkin in September to a felony charge of failure to pay taxes in 2009. Five additional felony charges were dismissed by the prosecution.

Last week, 9th Judicial District Judge John Solien stayed imposition of a sentence, which allows the felony to be reduced to a misdemeanor conviction on Sterling’s record, if he follows the terms of probation for five years.

The judge ordered that Sterling pay $18,163.99 in restitution and serve 30 days at the Aitkin County Jail or complete 60 days of electronic monitoring. He also must complete a gambling assessment and stay away from all gambling facilities until the restitution is paid in full.

The charges were brought after an investigation by the Minnesota Department of Revenue, which concluded that Sterling had failed to pay taxes or file a tax return for the 2006, 2008 and 2009 tax years.

The revenue department said Sterling told investigators he had prepared tax returns for 20 years and understood the filing requirements. Sterling, the owner of Aitkin Tax Service Inc., told investigators that he completes about 400 to 500 tax returns annually and charges an average of $125 per return.

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 was 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.

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