According to a lawsuit filed on Wednesday, Michael Saylor, co-founder and Executive Chairman of MicroStrategy, has sued District of Columbia Attorney General Karl Racine for allegedly dodging more than $25 million in income taxes.
“Pay your fair share in taxes,” DC Attorney General Karl Racine
Racine announced the lawsuit against Michael Saylor in a Twitter thread on Wednesday, alleging that the influential Bitcoin bull had “never paid any DC income taxes.” The lawsuit also names the enterprise software company Microstrategy as a defendant claiming that the company “conspired” to assist Saylor evade paying taxes. Racine said his office was looking to recoup over $100 million in unpaid taxes and penalties.
According to the AG’s office, Saylor claimed to be a resident of either Florida or Virginia for more than two decades with lower or no personal income taxes. All this while, he lived in several homes around the District of Columbia, including a penthouse apartment in Georgetown and a yacht on the Georgetown waterfront or Potomac river. Saylor did not make income tax returns in DC from 2005 to 2021.
“With this lawsuit, we’re putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable,” said Racine.
According to the lawsuit filing, Saylor boasted to his close friends about his brilliant plan to pretend that he was residing in Florida to avoid DC’s income taxes.
The AG has also presented as evidence screenshots allegedly from Saylor’s Facebook posts dating back to 2012 showcasing the view from the balcony of his Georgetown penthouse that he supposedly spent a lot of money to renovate.
“View from my Georgetown balcony this morning. Now I need to finish renovating the apartment, so I can move back in”, Saylor posted on Facebook in 2012, according to the lawsuit.
A person who lives in Washington, DC, for at least six months is considered a resident and is required to pay income taxes and make returns of the same.
MicroStrategy is Saylor’s Accomplice – DC’s Attorney General
Among Racine’s allegations is that MicroStrategy “had detailed information confirming” that Saylor was a DC resident but did not report it to the authorities. This implies the Company conspired with its former CEO to “facilitate his tax evasion,” making it an accomplice in the matter.
“Saylor avoided paying more than $25 million in DC income taxes by claiming to be a Florida or Virginia resident. [MicroStrategy] actively conspired with Saylor to enable his fraud, including by filing inaccurate W-2s with the address of his property in Florida rather than his home in DC, and by failing to withhold and remit DC taxes”, alleged the AG’s office.
In a statement, Microstrategy responded to the allegations noting that the suit was Saylor’s tax matter. The report went on to state that “The Company was not responsible for his day-to-day affairs and did not oversee his tax responsibilities. Nor did the Company conspire with Mr. Saylor to discharge his tax responsibilities. The District of Columbia’s claims against the Company are false, and we will defend aggressively against this overreach” (Financial Times).
MicroStrategy’s share price dropped by 6.7% on Wednesday afternoon following news of the lawsuit. When writing this article, the stock was trading at $220, up 0.18% on the day.
Saylor disagreed with the lawsuit indicating that he lives in Florida (Financial Times).
Saylor, whose leadership exposed the Company to cryptocurrencies and Bitcoin, stepped down as CEO on august 2, 2022, to assume the role of “executive chair.” Under his leadership, the business intelligence company acquired Bitcoin worth $4 billion at an average price of $30,700 per BTC.