U.S. Court Clears MicroStrategy of Tax Evasion Allegations

A court in the United States has ruled to dismiss tax evasion allegations against the Bitcoin-friendly software development company MicroStrategy and its co-founder Michael Saylor.

According to the court document released by the U.S. financial regulator, the Securities and Exchange Commission (SEC), the court has approved the defendant’s motion to dismiss the case, which claimed that MicroStrategy conspired with Saylor to avoid more than $25 million in taxes. 

The Genesis

In August 2022, Karl Racine, a former Washington, D.C., Attorney General (OAG), filed a civil lawsuit against the business intelligence company and its co-founder Saylor, a strong Bitcoin (BTC) proponent. 

The complaint claimed that Saylor deliberately failed to report his income earnings to tax authorities in D.C. despite living in the province for years.  Furthermore, the OAG alleged that Saylor pretended to reside in Florida while living in his penthouse in D.C. 

The OAG said both MicroStrategy and its co-founder, Saylor, violated the District’s False Claims Act and are seeking more than $100 million in restitution.

Court Clears Part of the Allegations 

On Thursday, the Office of the Attorney General for the District of Columbia granted the motion to dismiss part of the OAG’s allegations against the company and its former CEO. 

The court has cleared the claims that MicroStrategy helped Saylor evade taxes, violating the district’s law. The court also dismissed the claims that both MicroStrategy and Saylor breached the District’s False Claims Act.  

However, the allegation against Saylor for failing “to pay personal income taxes, interest, and penalties due” remains valid with a status conference scheduled for March 10, 2023. 

“The court did not dismiss claims against Mr. Saylor alleging that Mr. Saylor failed to pay personal income taxes, interest, or penalties due,” the document reads. 

In a separate report by Bloomberg, Saylor said he is prepared to defend the OAG’s claim that he lived in Florida while he resided in D.C.

“I’m pleased the court dismissed the District of Columbia’s False Claims Act claims against MicroStrategy and myself. I continue to respectfully disagree with the district’s position on the remaining claims and will continue to defend against those claims. I look forward to an appropriate resolution of this case in due course,” Saylor told Bloomberg.