MicroStrategy Calls D.C. ‘Tax Fraud’ Lawsuit ‘False’ and Says it Will Fight Back ‘Aggressively’

The District of Columbia’s Attorney General has publicly stated that his office will launch a tax fraud lawsuit against the IT firm MicroStrategy and its Bitcoin (BTC) bull former CEO Michael Saylor. But the firm called the lawsuit “false” – and has vowed to “defend aggressively” against what it called an “overreach.”

MicroStrategy holds much of its balance sheet in BTC, and has become a poster child for corporate BTC investment. Saylor, meanwhile, has become one of the most vocal BTC evangelists on social media. He recently stepped down as CEO, and is now the firm’s Chairman.

But the Washington D.C. Attorney General (AG) Karl A. Racine wrote, in a series of tweets, that the capital would be “suing” both Saylor and MicroStrategy for “tax fraud” – accusing Saylor of dodging over USD 25m worth of taxes payable to D.C., by claiming he was not a resident of the capital. Instead, the AG says that Saylor and MicroStrategy claimed that the ex-CEO was a resident of Florida or Virginia. Both states have lower rates of tax.

Racine wrote:

“With this lawsuit, we’re putting residents and employers on notice that if you enjoy all the benefits of living in our great city while refusing to pay your fair share in taxes, we will hold you accountable.”

He added that the AG’s office was “also suing” MicroStrategy for “conspiring to help” Saylor “evade taxes he legally owes on hundreds of millions of dollars he’s earned while living in D.C.”

The AG claims that Saylor resided at a luxury penthouse in the Georgetown District and had moored several yachts on the D.C. Potomac riverfront. The AG thinks that Saylor has lived in D.C. “from 2005 to present.”

But Saylor appeared undaunted, denied the allegations – and stated his intention to fight the claims in the legal sphere.

In a statement reported by Bloomberg, Saylor said:

“I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts. Although MicroStrategy is based in Virginia, Florida is where I live, vote, and have reported for jury duty, and it is at the center of my personal and family life.”

Saylor explained that he had relocated to Florida’s Miami Beach from Virginia 10 years ago after “purchasing a historic house there.”

Per a tweet from Eamon Javers, CNBC’s Senior Washington Correspondent, MicroStrategy stated:

“The case is a personal tax matter involving Mr. Saylor. The company was not responsible for his day-to-day affairs and did not oversee his individual tax responsibilities. Nor did the company conspire with Mr. Saylor in the discharge of his personal tax responsibilities. The District of Columbia’s claims against the company are false and we will defend aggressively against this overreach.”

On Twitter, many waded into the discussion – including one who pointed out that D.C. laws consider anyone who spent 183 in a calendar year in the United States capital to be a resident.

Others questioned the rationale behind the AG’s decision to publish details of the lawsuit on Twitter. One poster mused:

“Why is this something a government official feels the need to post on social media? What are you trying to accomplish? What’s the agenda here? It’s no one’s business besides Saylor’s and the government.”

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