A Davenport business owner faces up to eight years in federal prison after pleading guilty to charges that he did not file tax returns individually and for the business over several years.
Jonathan Folker, owner and operator of Nerdwerx, 210 Emerson Plaza, pleaded guilty Monday in U.S. District Court, Davenport to tax evasion and subscribing a false tax return.
He will be sentenced Dec. 9.
According to the plea agreement filed Tuesday, Folker did not file individual income tax returns for 2001-2011 or 2013-2017. He also did not file Nerdwerx's 2011-2013 corporation income tax returns.
The company, a web design, hosting and application development business, had never filed a federal income tax return, according to the plea agreement.
When Folker did file an income tax return with the Internal Revenue Service in 2012, he reported less income than he disclosed to lenders and did not truthfully reflect the financial benefit he received from Nerdwerx.
The IRS began an investigation around Sept. 2012 that continued to March 2014. An agent attempted to collect the tax, penalties, and interest for Folker’s 2001-2004 individual returns and get Folker and Nerdwerx compliant by filing all outstanding tax returns.
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Initially, in late 2012, the IRS requested his 2005-2011 individual and corporate returns to set up an installment agreement for the payment of taxes. It was during the collection activity that Folker filed an individual return for tax year 2012.
Around May 2013, Folker hired a tax company to assist him. A power of attorney for the company told the IRS that he was working on and would be producing Folker’s individual and corporate income tax returns so Folker and the IRS could set up an installment agreement to pay the taxes.
On Dec. 5, 2013, the power of attorney told the investigating revenue agent he thought three years worth of corporate income tax return and individual income tax return forms were complete. The IRS did not receive the returns.
A review of Nerdwerx’s financial records revealed substantial income was generated by Nerdwerx and paid to Folker from January 2008 through April 2013.
Around April 14, 2013, Folker filed a false individual income tax return form for tax year 2012 that underreported his actual income. He listed his income at $81,081 on the form; his actual income in the form of dividends from Nerdwerx was approximately $165,278.
In all, he owed the IRS $256,783.71, according to the plea agreement.