A Duluth woman who pleaded guilty to underpaying her Minnesota income taxes for four years received a probationary sentence Friday and was ordered to pay restitution to the state Department of Revenue.
Pattie Lyn Fralich-Peterson, 52, pleaded guilty in State District Court last month to four counts of filing with the Commissioner of Revenue a false or fraudulent return in 2005, 2006, 2007 and 2008.
Before being sentenced, Fralich-Peterson told the court she was ashamed of her actions and understood that punishment was in order.
Judge Heather Sweetland stayed imposition of sentence for three years of supervised probation and ordered the defendant to work out a restitution payment plan with the Department of Revenue and Internal Revenue Service.
According to the criminal complaint: A revenue tax specialist completed an investigation of Fralich-Peterson on Aug. 16, 2010. The investigator alleged that Fralich-Peterson overstated her state and federal withholdings on her income tax returns for four years and substantially underpaid her Minnesota income taxes for those years. The total overstatement of state withholding is alleged to be $6,452, causing her to receive larger refunds than she was entitled to.
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The Department of Revenue filed a letter with the Arrowhead Regional Corrections probation officer stating that Fralich-Peterson owes $11,422.63, including penalties and interest.
Public defender Rebecca Shaw told the court that her client only has disability income and has less than $300 a month to live on after paying for her housing. St. Louis County prosecutor Nathaniel Stumme argued that Fralich-Peterson intentionally failed to fulfill her tax liability and she should pay the restitution, but conceded that the defendant is in a dire financial situation.
Sweetland told the defendant to contact the state and federal agencies to work out a payment plan and at this point the court wasn't going to put a time limit on the payment plan as a condition of probation.
Between Jan. 20 and Jan. 23 of this year, a special agent with the Revenue Department criminal investigation division contacted Fralich-Peterson by telephone. The complaint alleges that she admitted to preparing the tax returns in question herself and filing them over the Internet. She admitted that the discrepancies between the withholding shown on her income tax returns and the withholding shown on her W-2s were substantial. She said she couldn't explain why there were substantial differences between the tax returns and the W-2s, why there were similar errors on each of her tax returns for 2004-2008, nor why all of the errors were in her favor.
As conditions of her probation, Sweetland ordered Fralich-Peterson to abstain from using alcohol and mood-altering drugs, except for those prescribed. The defendant must also submit to random urinalysis and breath tests to detect the use of chemicals.
