In 2022, the District of Columbia initiated legal action against Michael Saylor, the founder and Executive Chairman of MicroStrategy (MSTR), on allegations of failing to pay income taxes while residing in the district. On Monday, officials announced that Saylor has agreed to a $40 million settlement. This settlement is noted as the largest income tax fraud recovery in the history of the district, according to the attorney general’s office.

The lawsuit, filed in August 2022, accused Saylor of avoiding income taxes in the district for more than ten years by falsely claiming to reside elsewhere. The District also alleged that MicroStrategy conspired with Saylor to facilitate this tax evasion. The attorney general’s office estimated that Saylor managed to avoid paying over $25 million in taxes owed to the district during this time.

The New York Times was the first to report this development. In a statement to the New York Times, Saylor asserted that he has always been a resident of Florida, stating, “Florida remains my home today, and I continue to dispute the allegation that I was ever a resident of the District of Columbia.” He emphasized that his decision to settle was motivated by a desire to avoid the ongoing burdens of litigation on himself, his family, and his friends.

Following the announcement of the settlement, shares of MicroStrategy, headquartered in Tysons Corner, Virginia, rose by 3% in pre-market trading.

This case underscores the District of Columbia’s rigorous enforcement actions against alleged tax evasion by high-profile individuals. The significant settlement highlights the district’s commitment to ensuring tax compliance and recovering unpaid taxes. Despite agreeing to the settlement, Saylor’s statements indicate his continued dispute of the District’s claims regarding his residency and tax obligations. This case also brings to light broader issues related to tax residency and enforcement, particularly concerning wealthy individuals and corporate executives. It reflects the ongoing challenges and complexities involved in tax enforcement and compliance for high-net-worth individuals who may have multiple residences and intricate financial arrangements. ​​

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