IRD News

Baker jailed for persistent and premeditated tax evasion

Posted 25 November 2019

A Waikato baker has been sent to prison for nearly five years for persistent and premeditated multi-million-dollar tax evasion over six years.

Mara Sorm was found guilty by a Hamilton jury on 52 charges of tax evasion relating to himself, his wife, and their company after failing to declare some $6,500,000.00 in cash sales. He was sentenced today in the Tauranga District court to 4 years , 9 months in prison and ordered to pay $500,000 in reparations.

Inland Revenue spokesperson Karen Whitiskie says the tax evasion related to three bakeries in Matamata, Tirau and Thames.

“Our investigation revealed each bakery on average received approximately $347,000.00 in unreported cash each year. Instead of including the income on tax returns, the money was used to buy rental properties, repay a loan, fund household living and overseas travel,” Karen Whitiskie says.

“The offending was premeditated and persistent. Sorm kept notebooks recording cash income which he could have used to file accurate tax returns.  He chose not to.

“Sorm also failed to account for income received from rental property in Australia in his personal tax returns and gave further false information when questioned by Inland Revenue about suppressed income.

”When confronted by investigators Sorm made multiple attempts to avoid further inquiries by acknowledging that his returns had accidentally understated cash income and offering to repay the tax.  

“In December 2013, search warrants were executed on the defendant’s business and residential addresses. In contrast to what Mr Sorm had admitted to investigators, notebooks were found at the business premises which showed the bakeries true daily sales.

“In this case the amount of suppressed income was more than $6.5m and resulted in Sorm evading at least $2.8 million dollars of GST and Income Tax”. 

Inland Revenue relies on the taxpayer’s reporting of their income. Deliberate offending like this involves a significant breach of trust that undermines the integrity and public perception of the tax system.

“It simply isn’t fair on those law-abiding bakery and café owners who correctly and honestly declare their cash income. It’s another example of someone delving in to the hidden economy to try to get an advantage over other honest, hard-working New Zealanders," Karen Whitiskie says.