Local couple go to jail for tax evasion

A Central Point couple have been sentenced to prison and ordered to pay more than $400,000 in back taxes to the government after willfully failing to file federal income tax returns, a judge has ruled.

Kenneth L. Anderson, 63, and Dorothy S. Anderson, 61, were sentenced by U.S. Magistrate Judge Thomas M. Coffin Monday in Medford's U.S. District Court to 14 months in prison. In addition to paying back taxes, they must file delinquent tax returns.

The couple pleaded guilty in June to two counts of willfully failing to file federal income tax returns for 2004 and 2005, according to a press release from the U.S. Department of Justice.

The Andersons had sold Mannatech Inc. health supplements, both individually and through their corporation, AGK Services, since 1994. The Andersons had not filed tax returns since 1987, the government said, even as they earned more than $1.3 million in commissions between 2002 and 2004.

In response to contacts by the IRS, Kenneth Anderson failed to respond, responded with frivolous letters, and failed to appear for scheduled meetings with the IRS, said Kenneth J. Hines, special agent in charge of IRS criminal investigation for the Pacific Northwest.

The Andersons pleaded guilty to charges of failing to file tax returns, a misdemeanor, and were sentenced for that crime, Hines said.

"Failing to file your income tax return is not just failing to meet your obligation," he said. "Under the law, it is against the law."

Hines said the Andersons were not charged with felony tax evasion because they did not attempt to set up an offshore account, take overt acts to conceal their income, create offshore trusts or fictitious entities, or divert their income to others.

"Those are the factors that bring willfully failing to file your return up to the level of felony tax evasion," he said.

Hines stressed tax crimes are not victimless whether they are misdemeanors or felonies. The total "tax harm" to the government in the Andersons' case was more than $440,000, he said.

After serving their sentence, the Andersons will serve one year of supervised probation.

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