SIKESTON - A Sikeston businessman and former mayor is facing felony charges related to a "Corn for Cars" bartering operation.
Josiah D. "Josh" Bill was arrested by the Scott County Sheriff's Department Tuesday on two class D felony charges of willfully failing to make a sales tax return and one class C felony charge of forgery. Bill was released on his own recognizance.
"I have invited representatives of Department of Revenue to assess us for some time now. For reasons of their own, however, they've chosen to file criminal charges through the Scott County prosecutor," said Bill in a written statement issued Wednesday. "I am fully prepared to defend myself and am confident that I will prevail."
The charges state that between Aug. 12 and Aug. 31, with the purpose to defraud, Bill altered a letter ruling from the director of the Department of Revenue so that it omitted the sentence: "However, the individual purchase of the grain from the Applicant is subject to sales tax."
Officials allege this altered version was then used to arrange the exchange of grain for automobiles through car dealers and purchasers without collecting or paying sales tax to the state from the sale of the grain.
If convicted on this charge, Bill faces up to seven years incarceration and a fine of up to $20,000.
The other charges allege Bill knowingly failed to file sales tax reports with the Missouri Department of Revenue on the sale of grain sold at the retail level to non-tax exempt purchasers through a contract arrangement for the transfer of grain for motor vehicles.
These charges carry a maximum penalty of up to five years incarceration and a fine of up to $20,000.
"What the Missouri DOR has maintained is that my company owes sales tax each time we sell grain to individuals. We disagree," Bill said. "The Missouri statutes and DOR's own regulations are explicit on this point. The sale of grain is exempt from sales tax, period. There are no exceptions. There are no limitations for this exemption on either the parties to those sales or their purposes for the transactions."
Mark Crader, a special agent with the Missouri Department of Revenue Criminal Investigation Bureau of Cape Girardeau, signed a probable cause affidavit related to the altered document on Dec. 3 and on Feb. 14 signed a probable cause affidavit alleging Bill failed to file sales tax returns and pay sales tax due for each of the four monthly periods ending Aug. 31 through Nov. 30.
Crader writes in the affidavit that on Sept. 13 he was assigned to investigate the "Corn for Cars" booklet being distributed to vehicle dealerships in Southeast Missouri by Mid-Continent Grain Inc., owned by Bill.
The central office in Jefferson City advised Crader that the "Corn for Cars" program was a scheme for individuals who were not legitimate producers of the corn to buy the corn from Mid-Continent and trade the corn for a vehicle, thereby avoiding the vehicle's sales tax.
The program also offered a monetary incentive to the vehicle dealer for participating in the program as well as the strong selling point for prospective buyers.
Bill reportedly requested a ruling on July 11 from the Director of Revenue asking whether such transactions incur a sales tax. The director responded with a letter on Aug. 12 stating an individual purchasing a motor vehicle by trading grain of an equal value to the vehicle's purchase price does not incur a sales tax but the individual's purchase of the grain is subject to sales tax.
Crader wrote that Bill "chose to ignore the letter ruling and sold corn knowing that it was a retail sale and therefore taxable."
Vehicle dealerships in Cape Girardeau, Charleston, Sikeston, Dexter and Poplar Bluff were contacted by Crader who determined from their records that Mid-Continent Grain had conducted 95 "Corn for Cars" transactions between August and November while Department of Revenue records show Bill has not filed any sales tax returns reporting the corn retail sales or remitted any related sales tax.
Crader determined from the corn transactions that Mid-Continent Grain had taxable sales of $1,039,397 during the time period. Records show Mid-Continent Grain failed to remit $75,097.95 in sales tax to the Missouri Department of Revenue plus $1,495.33 in interest and $23,558.72 in penalties for a grand total of $100,152.
"What is important for either our past or future customers to understand is no one is contending that they owe sales tax on the vehicles they acquire through this means," said Bill. "As recently as two days ago a DOR representative conducting a training seminar for auto dealers in Cape Girardeau acknowledged that these transactions are legal."