Savage couple charged with multiple tax crimes 

ST. PAUL, Minn. – The Minnesota Department of Revenue announced that the Scott County Attorney’s Office recently charged Paul Odean Bailey and Paulette Mary Bailey, both of Savage, with four felony counts each of filing false or fraudulent individual income tax returns and two felony counts each of willfully failing to pay income tax.

The complaints state that the Baileys filed four false income tax returns between tax years 2021 through 2024 claiming very low or no taxable income despite them earning a six-figure salary. The Baileys allegedly filed their 2021 and 2022 income tax returns and paid the tax owed, only to later file an amended return with significantly lower taxable income amounts and a claim for refunds. For tax years 2023 and 2024, the Baileys submitted returns showing wages of over $700,000 but claiming their taxable income was a fraction of that in 2023 and was $0 in 2024. The complaints state they have not paid income tax for tax years 2023 and 2024. Altogether, the Baileys falsely requested over $140,000 in refunds, none of which were issued by the department. 

In explaining the reason for their refund claims, the Baileys allegedly referenced various court citations, articles, codes, and the US Constitution to show that taxes were not legal and their income not taxable. Department investigators found these references were miscited, taken out of context, or not applicable to the administration of income taxes. 

Each tax-related felony charge carries a maximum penalty of five years in prison, a $10,000 fine, or both. Defendants are presumed innocent unless and until proven guilty.

Although most taxpayers comply with tax laws voluntarily, the department takes enforcement action against noncompliant taxpayers to ensure that tax laws are administered fairly.

Many of the department’s criminal case referrals come from public tips. There is a 24-hour tip line for anyone who suspects that a person or business is violating Minnesota tax laws. Local callers may dial 651-297-5195 or call toll-free by dialing 1-800-657-3500. Tips can also be submitted to the department by email at tax.fraud@state.mn.us. Tipsters may choose to remain anonymous. 

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