HAMILTON COUNTY BUSINESSMAN PLEADS GUILTY TO THEFT

REVENUE INVESTIGATION LEADS TO TODAY'S PLEA

NASHVILLE, Tenn. - The Tennessee Department of Revenue's Special Investigations Section conducted the investigation that led to Donald Lee Phipps pleading guilty to one felony count of theft over $10,000 today in Hamilton County Criminal Court. Phipps, owner of Sam's Liquor Store, was sentenced to three years, suspended, and placed on unsupervised probation. Phipps was ordered to pay restitution to the state in the amount of $33,731.73.

"Tennessee's tax structure relies upon taxpayers voluntarily complying with the state's laws," said Revenue Commissioner Loren L. Chumley. "Taxpayers who collect but intentionally do not remit sales tax breach the public trust. This case underscores our commitment to collecting all taxes due the state of Tennessee."

Phipps was indicted by the Hamilton County Grand Jury on March 28, 2005, on 31 counts of sales tax fraud and one count of theft. The indictments charged that Phipps willfully and intentionally caused Sam's Liquor Store, located at 2438 Rossville Blvd. in Chattanooga, to file false and fraudulent sales tax returns for the periods Dec. 1, 2000, through June 30, 2003. These fraudulent actions resulted in Sam's Liquor Store failing to report $392,704 of taxable sales for the business and failing to remit $33,732 of the proper sales tax collected and due. The 31 counts of sales tax fraud were dismissed. Civil taxes, penalties and interest will be due in addition to the restitution ordered by the court.

Chumley encourages citizens who suspect violation of Tennessee's revenue laws to call the department's toll-free tax fraud hot line at (800) FRAUDTX (372-8389).

The department pursues criminal cases in cooperation with local district attorneys general.

The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2004-2005 fiscal year, the department collected $9.6 billion in state taxes and fees. In addition to collecting state taxes, $1.7 billion of local sales tax was collected by the department for local governments during the 2004-2005 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to www.Tennessee.gov/revenue.

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