Chattanooga Businessman Pleads Guilty To Sales Tax Fraud

NASHVILLE, Tenn. - On Nov. 16, Tommy James Hudgins, owner of Affordable Tires, located at 5008 Highway 58 in Chattanooga, pled guilty to four counts of theft of property. The Tennessee Department of Revenue’s Special Investigations Section conducted the investigation leading to yesterday’s guilty plea.

“When sales tax is collected from the public and not remitted, it is a breach of the public trust,” said Commissioner Loren L. Chumley. “The Department of Revenue aggressively pursues criminal sanctions and demands accountability for such actions.”

Hudgins was indicted by the Hamilton County Grand Jury on July 20, 2006, on 14 counts of sales tax fraud. The indictment charged that Hudgins unlawfully and knowingly evaded and defeated sales tax due the state of Tennessee by filing false sales tax returns for Affordable Tires for the periods February 2001 through March 2002. These fraudulent actions resulted in Affordable Tires failing to report $213,696.22 of taxable sales for the business and failing to remit $17,000 of the proper sales tax collected and due.

Hudgins was placed on two years supervised probation and ordered to pay full restitution in the amount of $17,000. The Department of Revenue will seek additional civil penalties and interest.

Citizens who suspect violations of the Tennessee revenue laws should call the toll-free tax fraud hot line at (800) FRAUDTX (372-8389).

The Department of Revenue is responsible for the administration of state tax laws and motor vehicle title and registration laws established by the legislature and the collection of taxes and fees associated with those laws. The Department of Revenue collects approximately 92 percent of total state tax revenue. During the 2005-2006 fiscal year, the department collected $10.3 billion in state taxes and fees. In addition to collecting state taxes, $1.8 billion of local sales tax was collected by the department for local governments during the 2005-2006 fiscal year. Besides collecting taxes, the department enforces the revenue laws fairly and impartially in an effort to encourage voluntary taxpayer compliance. The department also apportions revenue collections for distribution to the various state funds and local units of government. To learn more about the department, log on to www.Tennessee.gov/revenue.