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Boat and ATV dealer charged with $1.9M sales tax fraud

The Hastings businessman is accused of underreporting sales tax.

The co-owner of a boat and ATV dealership in Cottage Grove has been charged with underpaying sales tax over a period of years.

Jeffrey McKenzie, 59, of Hastings, is the co-owner of 61 Marine and Sports, and is facing three charges of preparing fraudulent tax returns following a lengthy audit investigation.

In total, the company avoided just over $1.9 million in sales tax, which when penalties and interest is taken into account, leaves the firm on the hook for $3.25 million.

The business sells boats, pontoons, boat motors, ATVs, snowmobiles and campers, with McKenzie the 50 percent owner and responsible for doing the company's books.

McKenzie submitted sales reported to the company's accountant, who in turn would submitted sales tax to the Minnesota Department of Revenue. 

However, a criminal complaint against him states that over a period of years starting in January 2013, McKenzie would underreport the monthly sales the business was making, in turn resulting in fraudulent tax returns being submitted to the state.

This continued until at least October 2017, when the company started "greatly over-reporting their sales tax in an effort to 'catch up' to what was owed," the complaint says.

When the police investigator showed McKenzie a spreadsheet with the figures showing the business' under-reported sales figures, he "admitted the numbers were wrong, but could not explain what numbers and why they were wrong."

His business partner was interviewed by police when they conducted a search warrant on the premises, and said that McKenzie was responsible for handling the finances and reporting the sales tax.

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