D.C. alleges Saylor, MicroStrategy evaded over $25 million in taxes

Michael Saylor and the company he founded, MicroStrategy, face legal action in Washington, D.C. over tax fraud. 

On August 31, Attorney General Karl Racine tweeted that D.C. is suing the tech executive:

District authorities accuse Saylor of evading over $25 million in D.C. taxes by misrepresenting his place of residence as either Florida or Virginia instead of the U.S. capital, due to the lower tax rates in those states compared to the District. MicroStrategy is based in Tysons Corner, Va. 

“Defendant Saylor knowingly avoided income taxes he owed to the District by fraudulently claiming to be a resident of other, lower-tax jurisdictions while maintaining his domicile and place of abode in the District, including living in a luxury penthouse the Georgetown waterfront and docking multiple yachts on the District’s Potomac riverfront from 2005 to present,” the complaint filed Aug. 22 but made public on Aug. 31 by Racine alleges. The filing cites social media posts by Saylor in Washington as part of its supporting evidence.

Saylor, for his part, countered that his primary residence for the past decade is in Florida. "I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts," he said in a statement. 

Racine's office also names MicroStrategy as a co-defendant, claiming that the company helped conceal Saylor’s place of residence for tax purposes, and that MicroStrategy’s chief financial officer documented the number of days Saylor spent either in Florida or D.C. 

"Sometime thereafter in 2014, the MicroStrategy CFO, brought the issue of Saylor’s fraudulent evasion of District taxes to Saylor as a potential source of liability for the company,” the complaint reads.  

"The case is a personal tax matter involving Mr. Saylor," MicroStrategy said in a statement, adding "The company was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities."

The company vowed to fight what it called the District's "false" claims and "overreach."

In a Wednesday press release, Racine's office characterized the complaint as, "the first suit brought under the authority of the District's recently passed False Claims Act that encourages whistleblowers to report instances where D.C. residents evade the District's tax laws by misrepresenting their residence." 

The suit asks the court to award the District Saylor's unpaid tax liability as well as "treble damages and civil penalties." 

Saylor stepped down from his position as CEO of MicroStrategy at the beginning of August following underwhelming returns on the company’s major bet on Bitcoin. Saylor said he would move to an executive chairman position,  “to focus more on our bitcoin acquisition strategy and related bitcoin advocacy initiatives." 

This story has been updated with comments from Saylor and MicroStrategy.