Republican State Rep. Michael “Mickey” Gates, 58, surrendered today at the Garland County Jail on felony charges that he’d failed to pay state taxes for six years. He has a long history as a tax deadbeat.
The State Police arrested Gates on six Class D felony charges for failure to file state income tax returns. The case was put together by the state Department of Finance and Administration, Special Prosecutor Jack McQuary and the State Police. He’s said to owe $259,841.95 in taxes, penalties
Gates, who’s served two terms in the House, has a Democratic opponent this year, Kevin Rogers.
In a call to Gates’ number, I was referred to his attorney, Joe Churchwell. He has not returned messages.
UPDATE: Churchwell provided this response by email:
Representative Gates was charged with failure to pay or file state tax returns after a State Police investigation was sought by the Arkansas Department of Finance and Administration. Representative Gates had been fully cooperating with the agencies in the audits and in trying to pay the back taxes, and the criminal charges came to him as a complete surprise. We will continue to cooperate and hopefully have a resolution soon.
The arrest warrant indicates Gates hadn’t filed tax returns since 2003, but
Much to come, including whether Gates will seek re-election. Conviction on this charge would seem to make him ineligible — if cheating the state is viewed as an “infamous crime.” Given that he faces felony counts, he might be urged by some in the legislature to resign now. I’ve asked House Speaker Matthew Shepherd for his thoughts.
Special Prosecutor McQuary said he couldn’t comment because it remained an open investigation. I asked if restitution could be sought in a successful prosecution and he said state law requires in cases where public money is involved that restitution
One question unanswered is whether Gates paid federal income taxes during the years in question.
This seems to be the culmination of a long history of failure to pay taxes due.
An FOI request by the Arkansas Democrat-Gazette in 2016 turned up records of tax liens against a number of legislators, with Gates the biggest scofflaw. The newspaper reported that the state had filed a $159,882 claim for individual income taxes against Gates and his wife, Susan, in February 2016. He contended he didn’t owe that much and blamed a “zealous” auditor.
The state had filed a tax lien against Gates and his wife in June 2014 for more than $22,000 in unpaid individual taxes. It filed a lien in September of that year for more than $22,000 in unpaid withholding. The state released in 2014 a claim for $166,000 filed in 2012. Gates blamed his problem on “some corporate theft” and said he’d worked long hours to build his business back.
In my opinion, it is functionally equivalent to theft to keep
Gates has run an advertising specialty knife company that came in for a little attention when it was pointed out his wares were made in China. He’s distinguished himself in the legislature mostly by fighting for legal discrimination against LGBT people.
Too bad Attorney General Leslie Rutledge’s new crack public integrity unit wasn’t at work. Maybe Gates would have been brought to the bar of justice sooner. There are other scofflaws on that deadbeat list, General Rutledge. Perhaps they merit a closer look.
From the arrest warrant by State Police Special Agent Joe Pickett:
Gates failed to file income tax returns in multiple years. The investigation began with McQuary’s appointment Dec. 6.
The DFA said Gates had filed no returns for the years 2003-2018, during at least four of those years he was being paid by the state of Arkansas as a legislator. He failed to file even in years after he’d been in long-running conversations with the state about past-due bills.
The investigator learned from DFA that Gates had been informed in October 2011 that he was to be audited and that the audit was completed in September 2015. Pickett interviewed Gates June 15 this year at the Capitol.
Gates told Pickett he’d received little information from DFA and thought the matter had been settled. He said he was paying $1,500 a month on settlement of a $30,000 claim for the period 2003-07. (It’s a little-known fact, though perhaps not to Gates, that unpaid liens go away after 10 years.) He said he was under the impression DFA had prepared and filed returns for him in the years 2007-15.
Gates said he had not filed returns since 2015 because, according to the affidavit, “he cannot file a return for years in which he does not know if he owes taxes.”
Gates, however, acknowledged a responsibility to file annually. He referred throughout the interview to taxes as being an “albatross around my neck.”
What had he done to rectify the situation, he was asked?
“Gates advised, ‘Very little, other than keeping all my receipts.”
During a second interview, Gates said, “First of all, all of this my responsibility … had I done everything right and correct, even if I was audited I still ould not have all of the other late consequences. So. I don’t ever want to make it sound like it’s not my fault.”
The affidavit concluded that documents showed that, for the years covered by the statute of limitations, Gates failed to file a state income for six years on which the charges were based, 2012-2017.
No mugshot yet posted on the Garland County sheriff’s jail intake page. I hope Gates isn’t getting special treatment on account of his high status.
CORRECTION: In the original version of this story I quoted McQuary, rather than State Police investigator Joe Pickett, who supplied the narrative for the affidavit on which the warrant was based.
PS: DFA in May compiled a spreadsheet of tax liens outstanding at that time against all candidates on primary ballots in Arkansas (which didn’t include some sitting members of the legislature who aren’t seeking re-election.) That search turned up only one other sitting legislator with an outstanding tax lien, Democratic Rep. Vivian Flowers of Pine Bluff who owed more than $6,600 on 2012 income taxes due.