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The owner of a gun store and shooting range in Great Falls that was raided by federal agents last summer, causing concerns and some outrage among Montana’s federal delegation, was indicted by a federal grand jury on Thursday for allegedly submitting false tax returns and failing to report about $1.4 million in sales to the Internal Revenue Service.
Tommy Michael VanHoose, 66, faces five counts of submitting a false tax return – one count for each year from 2018 through 2022 – which each carry potential penalties of up to three years in prison if he is convicted, according to the U.S. Attorney’s Office for the District of Montana.
“The indictment alleges VanHoose, by his own claims, skimmed cash from his firearms business and did not report 20 percent of his gross receipts to the IRS, which resulted in a substantial underpayment of income taxes to the United States,” U.S. Attorney Jesse Laslovich said in a statement. “After a thorough investigation conducted by the IRS, we allege VanHoose’s own statements to an undercover agent were accurate, which is why he is charged with multiple counts of submitting a false federal tax return.”
Undercover investigation prompts search warrant execution
According to a redacted indictment , VanHoose had put his business, Highwood Creek Outfitters, up for sale for $1.75 million early last year. The indictment does not make clear what drew the IRS’s attention to VanHoose and his business in the first place but says an undercover agent posing as a buyer contacted the real estate agent trying to sell the business on Feb. 6, 2023.
During that initial conversation, according to the indictment, the real estate agent told the undercover IRS agent that “not everything flows to the tax returns.” The real estate agent would afterward provide the undercover agent with business operations forms which showed net profits of $11,614 for 2020 and $16,234 for 2021 and tell the undercover agent there was “off the books” income that was “substantial.”
On March 20 last year, the real estate agent and VanHoose had a phone conversation with the undercover agent, whom VanHoose told there was “more than meets the eye” when it came to the business’s income and that he could say more if they spoke in person, according to the indictment.
The undercover agent went to the business on May 3, 2023, and during a tour, VanHoose told the agent he had skimmed about $450,000 in cash from the business and had not reported about 20% of sales to the IRS.
The indictment said that resulted in an underreporting of about $1.47 million, which meant VanHoose owed the IRS around $442,000, based on his own admissions.
The undercover agent asked VanHoose how he could underreport income when any firearm sold also required the business to fill out an ATF Form 4473 that identifies the make, model and serial number of the weapon.
According to the indictment, VanHoose said it was easy to do because the IRS didn’t know what he was paying for the guns or how much he was selling them for. The indictment says he told the undercover agent that the forms had accurate sales information, but VanHoose would underreport his income.
IRS agents executed a search warrant at the business on June 14 last year, seizing the ATF Form 4473s that had the actual gun prices on them and confirmed VanHoose was skimming cash and underreporting his income.
Comparing the business’s point-of-sales system records with VanHoose bank records, the agents found VanHoose deposited about $726,000 less in cash than was recorded in the system. The records also showed he sold guns at a higher price than what was put into the system by around $187,000.
The indictment says VanHoose also prepared ATF forms for about $572,000 in guns he sold or gave to others and never entered those transactions into the system. It says he also lied to his accountant and provided them incomplete records, did not deposit cash sales into his bank account, and gave his accountant bank account records that did not include all of his income.
“The records obtained pursuant to the search warrant reflected VanHoose underreported, consistent with his statements, approximately 20% of his income, which was $1,486,404.24,” the indictment says. “Had VanHoose accurately reported this income, it would have caused an additional tax due and owing of approximately $492,254.”
Response to the warrant execution from Montana delegation
When news of the search warrant execution by the IRS and Bureau of Alcohol, Tobacco and Firearms reached Rep. Matt Rosendale, R-Montana, he quickly responded and criticized the IRS and Biden administration, which at the time was working to boost the IRS’s staffing to collect more money from people dodging tax payments.
On the day the warrant was executed, Rosendale said he was “incredibly disturbed” that the business had been “closed … without any warning.”
“This is yet another example of the Biden Administration weaponizing federal agencies to target and harass hardworking Americans,” Rosendale said on June 14 last year. “We cannot allow Biden to continue expanding these agencies to infringe on our liberties.”
Two days later, after meeting with VanHoose in Great Falls, he wrote a letter to the ATF director and IRS commissioner calling the warrant execution “outrageous” and a “witch hunt,” and saying the agencies were exhibiting “a pattern of intimidation and harassment against hardworking Americans.”
“I remind both Director Dettelbach and Commissioner Werfel that Congress has the power of the purse, and I will ensure that funding for these agencies is not weaponized against the American people,” Rosendale wrote in the letter.
A week after the warrant was executed, U.S. Sen. Steve Daines, R-Montana, sent the IRS a letter asking for more information about the raid and saying he had concerns that agents had seized the ATF Form 4473s that contained personally identifiable information about people who had bought guns there, and that local law enforcement had purportedly not been informed about the warrant execution.
U.S. Sen. Jon Tester, D-Montana, also sent the two a letter on June 23 acknowledging “there are limits on sharing information during an ongoing investigation” while asking what steps they were taking to provide local law enforcement necessary information about the case and what was being done to ensure people’s privacy was being protected on the ATF forms.
Following those letters, the IRS announced on July 24 it would end most unannounced visits to taxpayers by revenue officers, and the commissioner said those changes “will increase confidence in our tax administration work and improve overall safety for taxpayers and IRS employees.”
But there are limited exception s, including service of summonses and subpoenas, and “sensitive enforcement activities involving seizure of assets” where unannounced visits are still allowed.
On June 30 last year, Rosendale introduced a bill he called the “Why Does the IRS Need Guns Act” that sought to prohibit the agency from buying or possessing any firearms or ammunition and move its criminal investigation division under the Department of Justice.
In late September, Daines said at a Senate committee hearing in front of President Joe Biden’s nominee for chief counsel of the IRS that he was not sure why the IRS would be seizing the ATF forms and that IRS agents were “targeting everyday Americans,” citing the warrant execution.
“These actions show the IRS isn’t going after wealthy tax cheats, they are going after main street businesses,” Daines said.
Rosendale in October introduced another bill that sought to remove personal information from ATF Form 4473 and require any federal agency to work through the ATF when requesting one of those forms.
And last November, Rosendale again cited the warrant execution at Highwood Creek Outfitters when he voted for a bill seeking to strip out funding Biden had requested for the increased number of IRS agents.
A spokesperson for Rosendale did not respond to a request for comment on VanHoose’s indictment on Friday.
A spokesperson for Daines explained he had been concerned about a “lack of transparency and answers” from the IRS concerning the ATF form seizures.
“When the IRS raided Highwood Creek Outfitters in 2023, Senator Daines was concerned with the lack of transparency and answers from the IRS, especially considering an unknown number of Montanans’ personally identifiable information was reportedly seized without any clarification. Also, local law enforcement were kept in the dark about the raid, but were expected to answer the community’s rightful concerns about 20 armed agents from the federal government in their town,” the spokesperson said. “Daines trusts the judicial process and will respect the outcome.”
A spokesperson for Tester released the following statement on the indictment: “Senator Tester believes every American should be treated fairly before our legal system and expects this case to be no different.”
VanHoose is set to be arraigned in the case in Great Falls at 1:30 p.m. on Sept. 10 before a U.S. magistrate judge. Each of the five counts carries a maximum penalty of three years in prison, a $250,000 fine, and a year of supervised release upon conviction.
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