A Douglas bar owner has been sentenced to serve a total of 80 days in jail for failing to pay city sales taxes, making him possibly the first person to serve jail time for such an offense.
Patrick M. Peterson, 55, the owner of PP’s Douglas Inn, was also ordered to pay nearly $55,000 in restitution. About $39,000 of that is for unremitted taxes from Dec. 2009 to June 2012. The remaining balance is in late filing fees, late payment fees and interest.
Peterson had entered into a plea deal back in October and pleaded guilty to eight of the 16 misdemeanor counts against him. The plea deal drops the remaining charges.
Assistant City Attorney August Petropulos says Peterson was essentially committing theft when he violated the City and Borough of Juneau’s uniform sales tax code.
Business owners collect sales tax from purchases on behalf of the city and hold that money in trust until it’s submitted to the city on a quarterly basis. It’s a voter-initiative that has passed for many years.
“The business owner does not own the money,” Petropulos told the judge during Friday’s sentencing hearing. “That business owner is to then turn it over to the city. It’s never the person’s money to begin with, so this is theft, and Mr. Peterson has been stealing from the tax payers for quite some time.”
He said the sentence was designed to deter Peterson, as well as other business owners, from not complying with the sales tax laws.
Peterson told the judge that he used the money to pay for lawyers’ fees. He explained that his daughter had been charged with assault in Tacoma, Wash., and that he needed money to bail her out of jail and to pay for her attorney.
“My daughter is my only child, and her father’s love is unconditional,” Peterson said, adding, “It took money from every resource I could find to do it.”
Peterson also added that he was financially strapped since he visited Washington five or six times in the past year to visit his father before he died in September of 2011.
Juneau District Court Judge Keith Levy was unimpressed with that explanation, saying, “I see people here that are charged with crimes every day whose parents don’t steal to enable them to get lawyers, so I don’t find that a particularly sympathetic argument, or even an explanation. I think it’s a very serious matter. Nobody loves taxes but it’s how the city functions.”
Most business owners do pay the sales tax, according to Joan Roomsburg, the city sales tax administrator. Of the 3,883 registered businesses in Juneau in September, only 47 active businesses had a balance due; nine inactive businesses had a balance due; and there were 90 delinquent filers, according the numbers released by CBJ in September.
The total amount that all businesses owed in sales tax in September was about $297,800, according to Roomsburg.
Business owners are only prosecuted when collection efforts are exhausted, Roomsburg told the Empire in an earlier interview in October. The judge also pointed that out during Friday’s hearing.
“They give people every chance, they work with people and try to get them to pay the tax, they’re cognizant of not wanting to shut the business down to collect the tax,” Levy told Peterson. “Obviously that creates a situation where they shut the business down, they’re not going to be collecting tax later, but when people are really callous and refuse to pay, then this is what it leads to.”
The affidavit filed by Petropulos showed Peterson was unresponsive when informed by the city that he owed money.
Levy noted that Peterson has prior convictions for similar violations in 2003, which probably could have warranted an even harsher sentence in this case.
Levy accepted the plea agreement, though, which called for 90 days of prison with 80 days suspended on the eight charges Peterson pleaded guilty to, for a total of 80 days to serve. Peterson will also be placed on probation until the amount is paid.
Roomsburg said earlier this was the only case she knows of in her 18 years at her office where a defendant has received jail time. Petropulos indicated he was under the impression this was a first, as far as he knew.
Peterson’s attorney John A. Leque told the judge that his client is expected to inherit a large sum of money soon from his father, which should pay off the restitution. Peterson was ordered to report to jail after the holidays.
• Contact reporter Emily Russo Miller at 523-2263 or at about:email@example.com.