Day 2 of 'Ax the Tax' founder Doug Guetzloe trial ends

IRS employee, accountant testifies on Guetzloe's failure to pay taxes

Published On: Feb 07 2012 12:17:57 PM EST  Updated On: Feb 07 2012 06:58:16 PM EST

Day 2 of 'Ax the Tax' founder Doug Guetzloe trial ends

ORLANDO, Fla. -

The federal tax trial continued Tuesday morning for the political consultant and founder of the Ax the Tax group in Orlando.

Doug Guetzloe, 57, is charged with failing to file personal tax returns for 2005 and 2006, years in which he earned a total of $375,254, according to a criminal investigation filed against him by federal prosecutors.

On Tuesday, an IRS employee and Guetzloe's former accountant testified about Guetzloe’s failure to file taxes on time-- or at all. The IRS employee told jurors Guetzloe would have owned about $40,000 on income of about $375,000 if he would have filed tax returns in 2005 and 2006.

Federal prosecutors are establishing a pattern for the jury of a man who repeatedly fails to pay his taxes on time. Although Guetzloe is only charged for failing to file for 2005-2006, U.S. District Judge Gregory Presnell is allowing the government to go back to 1992 to show previous tax history.

The government said Guetzloe has filed his tax returns up to seven years late and twice not at all in 2005 and 2006, which is what he's being charged with in the trial.

His former accountant Shirley Johnson testified before lunch break on Tuesday. She said his companies had more than half a million dollars in income in 2005. She told jurors she prepared financial statements for Guetzloe's companies in 2005 that would have resulted in him paying personal taxes, if he had filed a return.

The government said Guetzloe should have paid taxes of $180,000 of that amount that went to Guetzloe personally.

It appears the government will reveal where some of that income came from, including powerful government and private entities.

In opening statements, which wrapped up Monday afternoon, Guetzloe’s public defender said his client did not pay his taxes like the rest of us do but he “cleans it up eventually” by paying penalties.

The assistant U.S. Attorney said Guetzloe failed to properly file tax returns in 10 out of 15 years. After allowing him to pay hundreds of thousands of dollars in back taxes and civil penalties, the government wants to put Guetzloe in prison.

Guetzloe made headlines in 2007 when news reports surfaced about him receiving hundreds of thousands of dollars from the Orange County Expressway Authority, a law firm that represented the Orlando Magic and other local developers.

The jury heard Tuesday the Orlando Magic believes it paid him $100,000 in 2006 to mute criticism of their new arena plans, according to an Orlando Magic executive who testified.

Guetzloe also received more than $100,000 in toll money in 2007 funneled from the Orlando-Orange County Expressway Authority through its marketing consultant. The consultant, Ron Pecora testified that he made the payments at the direction of the authority leaders.

The grand jury called those payments "hush money" to mute criticism of a planned toll increase. But it is not being touched on in the trial, which is strictly focused on Guetzloe's failure to file tax returns.

Guetzloe was already convicted of one misdemeanor charge, an elections violation that sent him to the Orange County Jail last summer. He served about six weeks of a 60-day sentence.

If convicted in this trial, he could face a minimum of 15 months to a maximum of two years in federal prison, according to federal sentencing guidelines.

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