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St. George Man Sentenced To 30 Months In Prison For Interfering With Administration Of Tax Laws

February 24, 2012

SALT LAKE CITY – Kenneth J. Neilson of St. George, convicted of corruptly obstructing and impeding the administration of federal tax laws, has been sentenced to 30 months in federal prison. U.S. District Judge Ted Stewart imposed the sentence Thursday at a hearing in Salt Lake City.

Judge Stewart also ordered Neilson to be on supervised release for 36 months when he finishes his federal sentence and to cooperate with the IRS in filing all outstanding tax returns. Neilson was taken into custody earlier this month after failing to appear at a Feb. 6 sentencing hearing in St. George.

Assistant U.S. Attorney Brent Ward told the court in a sentencing memorandum that Neilson’s actions are the essence of “tax avoidance conduct.” According to Ward, “The defendant obstructed and impeded the collection of delinquent taxes owed by him by placing assets in the name of third party nominees, forging signatures of third parties to transfer properties, using numerous layers of trusts to mask his own ownership of assets, using a purported church as a method of avoiding taxes, filing frivolous tax returns, reporting contradictory financial information to the IRS, mailing frivolous materials to the IRS as part of a tax avoidance scheme, and sending harassing letters to the IRS.”

Neilson pleaded guilty to one count of interference with the administration of tax laws in April 2011, admitting that he corruptly tried to obstruct or impede federal revenue laws from about March 1996 to June 2005. As a part of a plea agreement with federal prosecutors, Neilson admitted that the financial information he provided to the IRS was different from information he reported to lenders from whom he was seeking loans. He also admitted claiming to be a sovereign citizen of the State of Utah and not subject to laws of the United States.

Federal prosecutors dismissed one count of tax evasion as a part of the plea agreement reached with Neilson. The case was investigated by special agents of IRS-Criminal Investigation.

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