In pleading guilty Wednesday to failing to file a federal tax return, Erik Fresen appears to have also unwittingly acknowledged he underreported his income to the state during his eight years in the Florida House of Representatives.
Fresen admitted in his plea agreement that he didn’t file tax returns to the Internal Revenue Service from 2007-16. But the Miami Republican did submit annual financial disclosure forms to the Florida Ethics Commission from 2008-15. In those forms, Fresen claimed a five-figure annual income from Neighborhood Strategies, his land-consulting company.
The problem: The income Fresen reported to the state doesn’t jibe with the unpaid taxes the IRS says he owes.
Fresen’s lead defense attorney, Jeffrey Neiman, disputed that his client’s back taxes don’t match his state disclosures but declined to provide any documentation as evidence.
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“You are comparing apples to oranges,” Neiman said in a statement. “There is no discrepancy in what Erik reported to the state and what he earned. Period.”
Violations of state ethics laws can lead to civil fines, though there is a five-year statute of limitations.
Fresen also claimed up to $113,000 in student loans, though he graduated with a bachelor’s degree from Florida State, a public university.
Fresen consistently reported to the state income from two employers: $150,000 a year from Civica, an architecture design firm for which he did zoning work, and about $30,000 a year from the Florida Legislature. Both employers withheld federal taxes.
At issue is additional income Fresen earned as a self-employed consultant for Neighborhood Strategies for which he didn’t pay taxes — and now appears to have low-balled the figures to the state.
Consider 2008, when Fresen reported $25,000 in personal consulting income — but the IRS says he owes $56,433, more than twice as much, in back taxes. The owed tax figures do not include penalties and interest.
For 2011, the year for which Fresen pleaded guilty in Miami federal court Wednesday to failing to file a tax return, the IRS says he owes $30,324 in back taxes. In his state disclosure, however, Fresen claimed $45,000 in income from Neighborhood Strategies. That would amount to an impossibly high tax rate of 67 percent. The highest federal income tax rate is about 39 percent.
Similarly, in 2013, Fresen reported $40,000 in income — but he owes $35,714 in back taxes, which would amount to an 89 percent tax rate. The same is true in 2012 — Fresen reported $40,000 in income but owes $22,900 in back taxes, for a rate of 57 percent — and in 2010 — $45,000 in income and $28,605 in back taxes, for a rate of 64 percent.
In 2009, Fresen reported $12,000 in income, but the IRS says he owes $12,949 in back taxes.
In 2014 and 2015, Fresen reported earning $60,000 and $80,000, respectively, from Neighborhood Strategies. His plea agreement doesn’t list any unpaid tax bills for those years, apparently because he has already resolved them.
His final state financial disclosure, for 2016, is due July 1.