Colorado Springs businesswoman Lisabeth Melahn will serve 366 days in federal prison for willfully filing a false income tax return, according to a news release sent by U.S. Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd.
Melahn, 54, was sentenced March 22 in Denver. She appeared at the hearing free on bond. She was ordered to surrender to a U.S. Bureau of Prisons June 1 to give her “time to put her business affairs in order,” the release said. She was also ordered to pay $239,876 in restitution to the IRS and a $15,000 fine. Melahn was indicted March 26, 2015, and pleaded guilty Oct. 30, 2015.
Melahn owned and operated Tan Your Hide II, which had seven tanning salons in Colorado Springs and one in Monument. The stores provided tanning services and sold tanning lotions and some clothing. They were typically open seven days a week.
According to the press release, from 2007-10, Melahn had all the business’ receipts delivered to her every two weeks. She had all the checks and credit card and electronic funds receipts deposited to the business bank account, but none of the business’ cash receipts. Instead, Melahn put most of the cash into her personal bank accounts; in some instances, she kept the cash.
Melahn had bookkeepers prepare monthly financial reports for her, including monthly income statements which provided the total revenue from the business To prepare the financial reports, Melahn provided the bookkeepers the monthly bank statement for the business bank account and her handwritten check stubs for that account. She did not give the bookkeepers the daily sales reports, which she knew contained a clear record of the business’ cash receipts and she never told them that she was not depositing any of the business’ cash receipts into the business bank account. Nor did she ever tell them that the revenue figures on the monthly income statements were too low every month. The point-of-sale records revealed that the business’ cash receipts totaled nearly $1.1 million from 2007-10, which Melahn never reported to the bookkeepers.
One of the bookkeepers prepared Melahn’s income tax returns every year from 2007-10 using the year-end income statements, and trusted that Melahn had disclosed all of the business’ receipts to him. She had not, and as a result, the tax returns she signed substantially understated Melahn’s gross income for each of the tax years 2007-10.
“All Americans are required to pay their fair share of income tax under the tax laws,” said Walsh. “By hiding $1 million in her business income in a crude scheme to evade paying over $200,000 in taxes properly due and owing, this defendant shirked her duty as an American and as a citizen to support our country.”
“As we approach the end of tax filing season, taxpayers should think twice about trying to conceal income from the IRS; it’s only a matter of time before you are caught and brought to justice,” said Boyd.