ASHEVILLE, N.C. – U.S. Attorney Andrew Murray announces that, on August 20, 2019, an Asheville orthodontist and tax protestor, James E. MacAlpine, 72, was sentenced to prison for tax evasion. U.S. District Judge Martin Reidinger ordered MacAlpine to serve a statutory maximum term of 60 months in prison, followed by 3 years of supervised release, and to pay $2,194,849.03 in restitution to the IRS.
Matthew D. Line, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division, Charlotte Field Office (IRS-CI), joins U.S. Attorney Murray in making today’s announcement.
According to documents filed with the court, MacAlpine was the owner/operator of “James E. MacAlpine, DDS,” an orthodontic practice located in Buncombe County, which MacAlpine has operated since at least as early as 1992. At all relevant times, MacAlpine’s orthodontic practice generated taxable income. However, in 1996, MacAlpine stopped filing and paying his federal taxes. With the exception of a period of partial compliance following a state-court conviction in late 2001, MacAlpine has been out of compliance with the federal tax laws ever since.
By 2014, MacAlpine’s tax debt to the federal government had grown to approximately $1,962,354.11, comprising amounts still due and owing for tax years 1999, 2000, 2002, 2003, 2004, 2005, and 2006, plus penalties and interest. That year, the United States District Court entered an order finding MacAlpine indebted to the IRS in the same amount. By the time of his sentencing in this criminal case, MacAlpine’s total tax debt for those years had grown to approximately $2,194,849.03, which is the amount reflected by the Court’s restitution order.
Throughout MacAlpine’s long period of non-compliance with the federal tax laws, the IRS diligently attempted to assess and collect taxes from him. For example, in 2000, the IRS performed an examination using the available documents for tax years 1996 and 1997, and assessed taxes against MacAlpine for those years. In 2005, the IRS initiated an examination of MacAlpine’s tax liability for tax year 2002, and, soon thereafter, the IRS initiated examinations of MacAlpine’s tax liability for tax years 2003 and 2004. However, MacAlpine routinely obstructed these IRS attempts to determine his actual tax liability. For example, when the Revenue Agent (RA) assigned to conduct the examination of MacAlpine’s tax liability for 2002 attempted to make contact with MacAlpine and to request books and records necessary to make an accurate assessment, MacAlpine failed to meet with the RA or to produce any documentation. When the RA attempted to get the same information from a different source by issuing summonses to financial institutions, MacAlpine filed a series of frivolous legal challenges to those summonses. When the United States District Court dismissed those frivolous legal challenges, MacAlpine began to inundate IRS personnel—both the RA working the examination for 2002 and the Revenue Officers working collections for MacAlpine’s existing tax debts—with legally unfounded and factually inaccurate correspondence. For example, in early May of 2006, MacAlpine sent several IRS personnel a “Declaration of Political Intentions” in which he claimed to revoke his own U.S. citizenship, suggesting that it meant he no longer owed any taxes, even for those years with respect to which he had previously admitted that he did owe taxes.
Despite multiple warnings from the IRS that such filings were frivolous and could lead to civil and criminal sanctions, MacAlpine continued in this manner for years.
MacAlpine’s conduct was similarly obstructive with respect to the collections process. For example, between June of 2011 and January 2015, MacAlpine engaged in a game of hide-and-seek with the IRS, moving his money to new, or different, bank accounts every time IRS collections personnel located and garnished the account he had been using for his personal and business affairs. On at least one occasion, he moved money into an account opened in the name of a shell corporation. MacAlpine admits that he undertook these actions for the purpose of evading the collection efforts of the IRS.
On February 4, 2019, MacAlpine pleaded guilty to tax evasion. Following the sentencing hearing on August 20, 2019, MacAlpine was released on bond, and he will be ordered to report to the United States Bureau of Prisons, upon designation of a federal facility, to begin serving his sentence. All federal sentences are served without the possibility of parole.
In making today’s announcement, U.S. Attorney Murray thanked the IRS-CI for their outstanding investigative work.
Assistant United States Attorney Daniel Bradley, of the U.S. Attorney’s Office in Asheville, is in charge of the prosecution.