MicroStrategy co-founder sued by D.C. for not paying income taxes

Washington, D.C., is suing MicroStrategy Inc. co-founder and executive chairman Michael Saylor — probably best known as the largest corporate buyer of Bitcoin — for tax fraud, claiming that he skipped out on paying more than $25 million in income taxes despite living in the district for more than a decade.

According to the lawsuit, which was filed with the D.C. Superior Court's civil division, Saylor knowingly avoided paying taxes he owed since 2005 by fraudulently claiming to be a resident of other, lower-taxes jurisdictions, including Virginia and Florida. It claims that Saylor lived in a luxury penthouse on the Georgetown waterfront and docked multiple yachts on the district's Potomac riverfront. 

D.C. Attorney General Karl Racine announced the lawsuit on Twitter Wednesday. 

Bloomberg

"I respectfully disagree with the position of the District of Columbia, and look forward to a fair resolution in the courts," Saylor said in a statement provided to Bloomberg News. He said he moved to Miami Beach from Virginia a decade ago after purchasing a historic house there. 

"Although MicroStrategy is based in Virginia, Florida is where I live, vote, and have reported for jury duty, and it is at the center of my personal and family life," he said. 

MicroStrategy, a Tysons Corner, Virginia-based software company, is also being sued by D.C. for allegedly conspiring to help him evade taxes. Saylor was the CEO of MicroStrategy until earlier this month.

"The District of Columbia's claims against the company are false and we will defend aggressively against this overreach," MicroStrategy said in a statement.

The lawsuit claims that MicroStrategy was aware that Saylor lived in D.C. for more than half of the year, which under the district's laws would make him a legal resident. Regardless, the company allegedly filed inaccurate tax forms using his Florida address and failed to withhold and remit D.C. taxes, according to the lawsuit. 

The district's case originated with a whistleblower, who filed a complaint under seal in April 2021 under D.C.'s False Claims Act.

"Demonstrating his disdain for the rules that everyone else has to live by, Saylor publicly flaunted his billionaire lifestyle while bragging to his friends and associates about how he was evading District taxes," according to the whistleblower complaint. 

Shares of MicroStrategy fell 3.6% to $231.56 on Wednesday. The stock has dropped about 57% this year, mirroring the decline in Bitcoin. 

— With assistance from Tom Schoenberg, Hannah Miller and David Pan