Tax Protester Guilty of Felony Tax Charge

Date: 1/22/2007

RALEIGH – A Charlotte woman pleaded guilty Monday in Wake County Superior Court to a tax charge filed by the North Carolina Department of Revenue.

Caroline E. Gailey, 24, of 4200 Raney Way, Charlotte, pleaded guilty on Jan. 22, 2007 to one felony charge of attempting to evade or defeat the North Carolina individual income tax.

Wake County Superior Court Judge J.B. Allen Jr., sentenced Gailey to a six-month minimum, eight-month maximum prison term. The sentence was suspended and Gailey was placed on supervised probation for 24 months. She was also ordered to file her delinquent tax returns, perform 100 hours of community service and pay a $1,000 criminal fine.

The state’s evidence determined that Gailey provided her employer with fraudulent withholding allowance certificates claiming to be exempt from state income taxes. The certificates allowed her employer to stop withholding state taxes from her wages.

Gailey earned $35,904 in 2004 and only had $644 in state tax withheld from her wages. In 2005, she earned $76,397 and had no states taxes withheld. Gailey did not timely file her state tax returns in 2004 and 2005 in an attempt to evade or defeat the state income tax.

Tax protesters, individuals who dispute the government’s right to tax its citizens for any reason, actively seek methods that minimize or eliminate the amount of tax they are required to pay.

The charges against Gailey resulted from an investigation by a special agent with the Department’s Criminal Investigations Division in Raleigh.

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