The owner of a tire store in Alabama pleaded guilty to one count of tax evasion. Timothy Smith, of Cullman, Alabama, the owner of College Tire, was indicted in September 2008 and charged with two counts of tax evasion relating to the tax years 2002 and 2003.

According to court records, Smith diverted customer receipts from his tire business into two personal bank accounts. Smith also used cash and cashiers’ checks to make substantial principal payments on the mortgages for vacation homes in North Carolina and Florida. In all, Smith diverted more than $430,000 from his tire business to his personal bank accounts and mortgages. In about August 2003, he also purchased a real estate lot in North Carolina near his vacation home with $68,100 in cash.

Smith concealed the diverted funds from his bookkeeper, records show. Smith also took substantial fraudulent tax deductions in relation to a purported farm at his personal residence. As a result, Smith filed false personal and business tax returns for tax years 2000 to 2003. The tax loss resulting from Smith’s scheme was more than $400,000.

As part of his plea agreement, Smith agreed to a binding sentence of 30 months in prison and agreed to pay $170,380 in restitution to the IRS, including a lump sum payment of $50,000 to be paid prior to sentencing. As part of the plea agreement, the government agreed to dismiss tax charges against Smith’s wife, Lori Ann Smith.

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