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A LeRoy man facing over 20 counts of tax fraud, made his first appearance in Mower County District Court on Monday.

Craig Allen Jacobson, 66, of LeRoy, is facing 25 counts of felony charges that range from failing to file a tax return, failure to collect and remit taxes and submitting false or fraudulent tax returns.

According to the criminal complaint, the charges stem from a Minnesota Department of Revenue investigation (MDR), which began in 2020 and spanned four years worth of tax violations from 2015-2018. During that time, Jacobson oversaw two tax-preparation companies: M&I Tax and Accounting Inc and C&C Tax Service Inc.

In both cases Jacobson allegedly failed to file certain withholding returns, filed a false withholding return and failed to pay certain  withholding taxes.

The MDR investigation also revealed that the defendant submitted to Minnesota Revenue certain false or fraudulent federal returns.

The complaint alleges that from 2015 through 2016, M&I withheld taxes from the wages of approximately 25 employees, but never remitted those withholdings to MDR. Similarly, the events likewise played out in 2017 and 2018 at C&C.

During those four years, MDR sent over 90 notices — over 60 to M&I and over 30 to C&C regarding those failures to file and pay withholding taxes.

In the case of M&I, MDR sent the company a payment agreement on March 3, 2017, but on Aug. 31, 2017, MDR canceled the payment agreement for non-payment.

In an interview with him during the investigation, Jacobson admitted being “in charge” of both entities and that he did not file all of the required returns and did not remit all of the withholdings earned.

In looking at Jacobson’s tax documents for 2015-2018, MDR investigators obtained Jacobson’s tax returns and upon comparing them, found that state income tax returns did not match with federal returns over that four-year period.

The court complaint goes on to say that the investigation found that Jacobson had altered the federal returns submitted to the state, which resulted in little or no Minnesota alternative minimum tax based on his gambling winnings and losses.

Gambling winning and losses are treated differently under federal and state law. Federally speaking, gambling losses are deductible up to the total winnings. Jacobson’s gambling resulted in no taxes for federal purposes from 2015-2018, indicating he lost more than he won.

Meanwhile, under Minnesota law, gambling losses are not deductible for the alternative minimum tax purposes, however, gambling winnings can have a significant impact on the alternative minimum tax liability.

The complaint states that in another interview with MDR, Jacobson admitted that he personally prepared, filed and transmitted his income tax return each year since 2014.

If convicted, Jacobson is facing a possible maximum of five years in prison and up to $10,000 fine for each of the 25 counts.

His next court appearance is scheduled for March 21.