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82-CR-21-2951 Filed in District Court <br /> State of Minnesota <br /> 12/23/2022 9:39 AM <br /> Minnesota Statute 297A.61 Subd. 3(g)(2) provides that residential short-term rentals are a form of <br /> lodging and related services subject to Minnesota sales tax, and to all local sales and use tax, including <br /> all applicable local lodging taxes. <br /> SI Boyko issued subpoenas, interviewed renters, conducted surveillance and executed a search <br /> warrant. The investigation found that Karl and Susanne Auleciems rent or have rented the following <br /> properties: <br /> 1) the apartment over the garage at 1505 Neal Avenue Court to Mitch Olson. <br /> 2) the entire property at 1505 Neal Avenue Court using VRBO, HomeAway and Airbnb for short term <br /> rental <br /> 3) the cabin in Danbury Wisconsin using varies rental sites for short term rental. <br /> 4) 1535 Orwell Avenue North, Stillwater, Minnesota <br /> The Individual Income tax returns filed by Karl and Susanne Auleciems fail to report all the income from <br /> these rentals.The tax returns filed by the Auleciems from 2014 through 2019 reported $224,198 in <br /> rental income of their Schedule E. This investigation found the actual income from rental that should <br /> have been reported was$606,053. A significant understatement. <br /> The rental contracts reviewed by SI Boyko show a line item for ST. In an interview with SI Boyko and <br /> Humenik Karl Auleciems stated "ST" was a fee he charged, and it was not sales tax even though the <br /> rate, 7.125%for 1505 Neal Avenue Court and 6%for the cabin are the correct sales tax rates for each <br /> area. Emails with renters reveal Karl commenting on the tax on the contract. Older contracts for the <br /> cabin rental reveal the line item stating "Sales Tax" instead of"ST"with the same 6%. It is evident that <br /> Karl was charging sales tax on the short-term rental and therefore aware that sales tax should be <br /> charged. The rental contracts were between KEASons Enterprises and the renter. KEASons Enterprises <br /> is not registered with the MNDOR and does not have a sales tax permit nor has ever filed a sales tax <br /> return or remitted sales tax to the state of Minnesota. KEASons Enterprises is owned by Karl <br /> Auleciems. <br /> Case Summary 8 <br />