After a South Dakota court orders a sales-tax evader to pay up, a question lingers.
Was the money ever paid?
The answer in many cases is confidential, according to a recent ruling against the Rapid City Journal by a state hearing examiner.
More broadly, the ruling means that a legal cloak of secrecy covers some of the roughly $28 million in unpaid sales taxes and penalties collectively owed to state government by nearly 28,000 delinquent payers.
The path to the hearing examiner’s ruling started in November, when the Journal began trying to determine whether Ward Astin, of Hermosa, had ever satisfied a 2009 court order directing him to pay $60,000 of restitution to the state Department of Revenue.
A judge filed the 2009 order after Astin pleaded no contest in response to a charge that he failed to obtain a sales-tax license for his company, Arrow Associates. Court documents said the company engaged in sales-taxable services, including cleaning, snow-removal and lawn care, but did not obtain a sales-tax license or remit sales taxes to state government.
The same charge was leveled against Astin’s wife, Debra, and their adult son, David, but those charges were dropped in exchange for Ward Astin’s agreement to plead no-contest. During court proceedings, the Astins represented themselves without attorneys and used defense strategies associated with an anti-government belief system known as the sovereign citizen movement.
Perhaps triggered by the state investigation, federal investigators also took an interest in the Astins. Those long-running federal investigations culminated in a 21-count wire fraud indictment against David Astin that was filled under seal in 2016 and was unsealed after his apprehension this past November.
The Journal subsequently began reporting on the Astin family and sought to learn, as part of that reporting effort, whether Ward Astin had paid his $60,000 court-ordered obligation to state government.
Ward Astin’s public court file includes his dishonorable discharge from probation on Nov. 1, 2016. The order said Astin “failed to comply with all the conditions of probation imposed in that the defendant has not paid in full the restitution he owes the Department of Revenue.” But the order did not disclose the amount Astin still owed.
The Journal sought the information from Ward Astin, who did not return messages, and from court officials, who said they did not have access to the information and referred the Journal to the state Department of Revenue.
The Journal then sought the information from the Department of Revenue, which refused to provide it. As justification, the department cited state laws that classify tax returns and return information handled by the department as confidential. The laws also make disclosure of confidential tax-return information a misdemeanor.
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The Journal appealed the denial to the state Office of Hearing Examiners, which is state government’s designated referee for open-records disputes. In the appeal, the Journal asserted that the balance owed by Astin to the Department of Revenue was no longer confidential tax-return information but was instead criminal restitution that had been publicly ordered by a judge.
Chief Hearing Examiner Catherine Williamson ruled against the Journal on Jan. 28.
Since then, through further information requests to the Department of Revenue, the Journal has learned that the total of all unpaid sales, use and contractors' excise tax owed to the department, including interest and penalties, is about $28 million from 27,722 accounts. The department said those figures "could include amounts dating back to the inception of South Dakota's sales, use, and contractor’s excise taxes."
Ironically, even though one state law makes it a misdemeanor to disclose information about sales-tax delinquencies such as Ward Astin’s, another state law allows the Department of Revenue to publish a list of the 100 largest delinquencies.
The top-100 list, which the department provided to the Journal, shows delinquencies totaling $12.27 million and includes the names of the people and companies who owe the money, along with their addresses and the amounts they owe in taxes, interest and penalties.
Neither Ward Astin nor his business, Arrow Associates, is on the top-100 list. But even if the balance of his restitution was large enough to be on the list, he could be exempted from inclusion by yet another state law. That law prohibits the public disclosure of any unpaid taxes that are subject to a written agreement with the department, or are the subject of an administrative hearing, administrative review, judicial review or appeal of any such proceedings.
Wade LaRoche, spokesman for the Department of Revenue, said the department does not write off any delinquent tax accounts and has a team of revenue agents who work with delinquent payers.
Options to pursue payment include the filing of civil or criminal cases and the referral of debts to state government’s Obligation Recovery Center. The center, which is empowered to collect debts on behalf of numerous state agencies, was created by legislation passed in 2015.
The Obligation Recovery Center’s latest annual report says it collected $380,427 on behalf of the Department of Revenue for the 2018 fiscal year, which was the center's best fiscal year of collections on behalf of the department.