DES MOINES – A former Waverly dentist convicted of evading taxes in Iowa must pay them back with penalties and interest, the Iowa Supreme Court ruled Friday.
Marc Hagen was charged with four counts of fraudulent practices for willfully failing to file his Iowa income tax returns and pay taxes for years 2006 through 2009. He was also charged with four counts of tax evasion. A total of 7 felonies were leveled against Hagen.
In February 2012, the State offered to dismiss the four counts of tax evasion in exchange for Hagen’s guilty pleas to the four counts of fraudulent practices for failing to file tax returns and pay the taxes. Under the terms of the plea agreement, Hagen was required to pay restitution to the Treasurer of the State of Iowa.
The following month, Hagen entered written guilty pleas to the four counts of fraudulent practices. In April 2012, the district court engaged Hagen in a plea colloquy during which Hagen acknowledged that, for each of the years from 2006 through 2009, he willfully failed to file Iowa individual income tax returns and failed to pay the taxes. The district court accepted Hagen’s guilty pleas.
On May 29, 2012, the district court sentenced Hagen to five years in prison for the three felony counts of fraudulent practices and two years in prison for the aggravated misdemeanor count of fraudulent practices. The sentences were to run concurrently. The district court suspended the sentences and fines and placed Hagen on supervised probation. The court also ordered that Hagen pay restitution.
At a restitution hearing conducted on July 23, 2012, the State submitted the summary prepared by the department. The State also provided the testimony of the department auditor who prepared the summary. The auditor explained the summary and how she calculated the amount of unpaid taxes, penalties, and interest sought by the State. The State reiterated its request that the court order Hagen to pay $20,385.19 in restitution.
After the hearing, the court entered its restitution order. It ordered Hagen to pay as restitution $10,355, which represented unpaid taxes due for the years 2006 through 2009. The court concluded, however, that it could not require Hagen, as part of a criminal restitution order, to pay either the penalties or interest sought by the State. The court thus denied the State’s request for $8237.40 in penalties and $1792.79 in interest. The State sought discretionary review of the district court’s ruling denying the State’s request for penalties and interest in the restitution order. The Supreme Court of Iowa granted discretionary review.
The court ruled Friday that a judge should have included the full costs in the restitution order.
The ruling sends the case back to a lower court to calculate the penalties and interest. As of 2012, they totaled over $10,000. Records show that Hagen has already paid back $6,000.
