Tax liable - all crews flying to the US?

[Airbubba]

The wheel gets reinvented with U.S. pilots and taxes every few years. Some genius comes up with a scheme to avoid state and/or federal taxes. His buddies get in on the deal and it works great. For a few months.

Then one pilot gets busted, he turns in his (or her) buddies and the feds and the state file felony charges.

An example, some Northwest pilots figured they would claim their home address was a rented mailbox in ANC.

Tax probe now includes 42 Northwest Airlines employees

Jan 29, 2003

Associated Press

ST. PAUL -- A tax-cheating probe now includes 42 Northwest Airlines employees, and investigators have said that some pilots may have conspired to avoid paying Minnesota income tax, the St. Paul Pioneer Press reported today.

The paper cited state Revenue Department and Hennepin County officials as saying the probe has been expanded.The case previously involved seven Northwest pilots who were charged with tax evasion. They were accused of collectively owing $321,000 in unfiled taxes since 1996. Two have been convicted.

The 42 people under investigation include the original seven pilots who were charged. It also includes six new criminal probes, and 29 which are being pursued as civil cases.

The criminal cases all involve pilots. Most of the civil cases involve pilots, too, although other Northwest employees are also included, the newspaper reported. Prosecutors face less of a hurdle in bringing the civil cases, since they don't have to prove the "willful intent" necessary to win criminal convictions.

Authorities also have been looking for evidence of a conspiracy among pilots. A search warrant in the case of pilot Randall Enyeart of Excelsior, whose trial begins Monday in Hennepin County District Court, suggests pilots may have worked together.

According to the warrant, Enyeart's now-deceased brother told the state's Criminal Investigation Division that Enyeart was "willfully evading" Minnesota taxes by claiming to be a resident of Alaska, which has is no state income tax.

"He (Enyeart's brother) stated that several NWA pilots were sharing an address in Anchorage, Alaska, as their residence while retaining permanent residences in other locations," the warrant says.

Enyeart's attorney, Bob Sicoli of Minneapolis, said it's wrong to assume the warrant suggests that pilots cooperated with each other to evade taxes. He noted the warrant cannot be used as evidence, and said Enyeart is innocent.

Hennepin County prosecutors are handling the criminal cases for the state. In addition to the first two pilots who were convicted, and Enyeart, four others face trial dates over the next three months. Six others are under investigation, and may soon face criminal charges, said Hennepin County Attorney [now U.S. Senator D-Minn. and 2020 Presidential Candidate] Amy Klobuchar.

Last October, in the first pilot case, Dakota County Judge Karen Asphaug found Geoffrey Hickman of Mendota Heights guilty on five counts of tax evasion. The judge reduced the charges to a misdemeanor and sentenced Hickman to 150 days in jail. That ruling is under appeal.

A Northwest spokesman declined comment on the cases and ongoing investigations.

Here's another pilot scheme that's up for renewal, the tax church:

January 6, 1981 (UPI) HOUSTON -- An attorney for 10 Braniff Airways pilots who declared themselves ministers of the Basic Bible Church of America, obtained a church building, then stopped paying income taxes, said Monday he expects his clients to be indicted for tax fraud.

Lawyer Jerry Birnberg made the statement as another client, former Texas International Airlines pilot Charles L. Kageler, was sentenced to four years in prison and fined $5,000 for claiming tax-exempt status on his mail-order ministry in a Minnesota church.

Kageler, 47, of Meridian, Texas, also must serve five years probation after release from prison.

According to evidence presented during his trial, Kageler in 1977 paid $750 to a Minnesota man who issued a charter for the 'Basic Bible Church of America, Order of Almighty God, Chapter 7903.'

Testimony showed Kageler then took a vow of poverty, deeded to the church all his assets and future income, and refused to pay income taxes. Defense attorney Jerry Patchen said Kageler was not motivated by greed, and thought he was taking advantage of a legitimate tax loophole.

Although Kageler insisted he was a genuine minister who performed marriages and held religious services, government prosecutors successfully argued the church and the vow were a sham designed to avoid paying federal income taxes. Kageler was convicted in November of illegally withholding $40,000 in taxes from the Internal Revenue Service from 1977 through 1979.

As a TIA pilot of 20 years, Kageler was earning about $60,000 annually, prosecutors said.

Following Kageler's sentencing, his defense lawyer said the U.S. attorney's office in Fort Worth had been investigating the 10 Braniff pilots for the last year.

Birnberg said the cases had no direct link other than that both Kageler and the Braniff pilots all joined the same church.

Kageler has been on leave without pay from TIA. Braniff spokesman Jere Cox said Braniff had taken no action against any of its pilots being investigated.