B.C. polygamist omitted $1.7M in income tax filings

The leader of a small polygamous community in southeastern British Columbia has lost a case in federal Tax Court in which he was accused of underreporting his income by more than $1.68 million, marking the government's first major victory against a leader of Bountiful, B.C., after two decades of investigations into allegations involving child abuse, human trafficking and tax evasion.

Winston Blackmore, who leads one of two divided factions within the community, reported income of just under$172,000 for the years 2000 to 2004 and 2006, with his yearly income fluctuating between about $20,000 and $40,000.

The federal tax agency instead added hundreds of thousands of dollars a year of income and shareholder benefits associated with J.R. Blackmore & Sons Ltd., the company that oversees many of the business activities in Blackmore's side of the community, for a total of $1,856,368.

Blackmore argued an obscure section of tax law originally designed to allow Hutterite colonies to effectively divvy up income among members for tax purposes should apply to his community, which practices a fundamentalist form of Mormonism that allows polygamy. The mainstream Mormon church renounced polygamy more than a century ago.

But Judge Diane Campbell ruled Bountiful does not meet any of the criteria required for such status, such as a prohibition on members owning property and a requirement that members live and work in the community.

"Bountiful is too dispersed and fragmented to qualify as one of the specific types of community that Parliament envisioned" when it created the tax exemption for Hutterites, Campbell wrote in a decision dated Aug. 21.

"My conclusion is that the community of Bountiful does not meet any of the four criteria. ... Being unsuccessful in the issues in these appeals, the appellant offered little explanation in respect to why he made such massive misstatements in his income reporting in tax returns for successive years."

Campbell concluded Blackmore should have known he was misrepresenting and violating federal tax laws.

In addition to the income reassessment, the judge also slapped Blackmore with $148,983 in "gross negligence"penalties.

"The appellant ought to have known that ignoring the astronomical magnitude of the differences between the reported income/benefits and the amount of benefits assessed ...would attract some type of tax consequences," wrote Campbell.

"Therefore, I must conclude that the appellant's actions exceed simple carelessness and that he wilfully misrepresented the true state of the company's activities so that gross negligence penalties are justified."

Neither Blackmore nor his lawyer returned calls seeking comment.

Trial offered peek into insular community

Blackmore had argued Bountiful should be considered a "congregation" under the tax law, describing it as an "insular" community where education, work, marriage and social connections are centred around the church.

His tax trial, held in Vancouver last year, offered an unprecedented look at life inside the community, which has been the subject of numerous investigations dating back to the early 1990s.

• Read more: Blackmore testifies at tax trial
• Polygamous leader defends church status in tax trial

Blackmore told the court he had 21 wives and fathered 47 children during the tax years in dispute. A day later, he admitted forgetting one of his wives in his tally.

Blackmore was excommunicated from the Fundamentalist Church of Jesus Christ of Latter-Day Saints, or FLDS, in 2002, dividing the community in half.

Despite Blackmore's open admission that he and the residents of his community practise polygamy, as well as persistent allegations of child abuse and the trafficking of young brides across the border, no one from the community has been successfully prosecuted.

Polygamy charges were laid against Blackmore and another community leader, James Oler, in early 2009, but a court later threw out the case after ruling the men's rights had been violated over the use of a special prosecutor.

• Read more: Polygamy charges in Bountiful, B.C., thrown out

The failed prosecution prompted the B.C. government to launch a constitutional reference case, asking the province's Supreme Court to examine whether the Criminal Code provisions banning polygamy were consistent with the Charter of Rights and Freedoms.

The court issued a ruling in 2011, upholding the law as constitutional, so long as it isn't used to prosecute child brides.

The RCMP launched yet another investigation after allegations surfaced during the constitutional hearings that dozens of young girls from Bountiful had been spirited across the border to marry older American men, including Warren Jeffs, the self-proclaimed leader of the FLDS. Jeffs is now in prison for sexually assaulting two of his teen brides.

• Read more: B.C. polygamist linked to child bride, court told

A special prosecutor is currently examining evidence gathered by the Mounties, though it's not clear when he will decide if charges will be laid.