State of Minnesota v. Daniel Roy O'Day

1

STATE OF MINNESOTA

IN SUPREME COURT

A24-2009

Court of Appeals State of Minnesota, Respondent,

vs.

Daniel Roy O'Day, Appellant.

Hennesy, J.

Took no part, Aligada, Jr., J. Filed: November 4, 2026 Office of Appellate Courts ________________________ Keith Ellison, Attorney General, Saint Paul, Minnesota; and Kelsey A. Hopps, Crow Wing County Attorney, Travis J. Smith, Special Assistant County Attorney, Slayton, Minnesota, for respondent.

Matthew J. Wildes, Wildes at Law LLC, Roseville, Minnesota, for appellant. James H. Gempeler, North Star Law Group PLLC, Saint Paul, Minnesota, for amicus curiae Minnesota State Bar Association Tax Section.

________________________

S Y L L A B U S

1. To prove felony tax evasion under Minn. Stat. § 289A.63, subd. 1, the State must prove that a defendant failed to file a return or pay a tax with the purpose of deceiving the government regarding a tax obligation.

2. Probable cause supported appellant's felony tax evasion charges because the State's evidence was sufficient to present a fact question as to whether appellant

2

failed to file returns and pay his taxes with the purpose of deceiving the government regarding his tax obligations.

Affirmed.

O P I N I O N

HENNESY, Justice. In this pretrial appeal, we must interpret Minnesota's tax evasion statute, which makes it a felony offense for a person to (1) "willfully attempt[] in any manner to evade or defeat a tax by failing to file [a return, report, or other document] when required,"

Minn. Stat. § 289A.63, subd. 1(a); or (2) "willfully attempt[] to evade or defeat a tax law by failing to [pay or to collect and remit a tax] when required," Minn. Stat. § 289A.63, subd. 1(b). The same statute also designates "knowingly, rather than accidentally, inadvertently, or negligently, fail[ing] to" file a tax return or pay a tax as a gross misdemeanor offense. Minn. Stat. § 289A.63, subd. 1(a), (b). The parties ask us to determine the meaning of the statutory language "willfully attempts to evade or defeat"

as it relates to both the required act and the required mental state for the felony offense. We conclude that felony tax evasion requires the State to prove that in failing to file a return or pay a tax, a defendant willfully attempted to deceive the government regarding a tax obligation. In this case, because the State's evidence is sufficient to present a fact question as to whether O'Day intended to deceive the government regarding his tax obligation when he failed to file returns and pay his taxes, probable cause supports the felony charges at issue. We therefore affirm the court of appeals'

3

decision reversing the district court, and we remand to the district court for further proceedings consistent with this opinion.

FACTS

In January 2023, the Minnesota Department of Revenue (the Department) received a tip that appellant Daniel Roy O'Day was not filing individual income tax returns or tax returns for his company, O'Day Transportation. The Department conducted an investigation, which included reviewing O'Day's tax filing history and bank records, subpoenaing evidence from businesses associated with O'Day, and conducting online searches. The Department concluded that O'Day had failed to file individual Minnesota income tax returns and failed to pay individual Minnesota income taxes for tax years 2018-2022.

To determine O'Day's income and calculate the taxes he potentially owed, a tax specialist performed an audit of O'Day's bank records and financial information. The audit indicated that O'Day had significant income from 2018 to 2022, requiring him to file tax returns and pay taxes for these years.

According to the Department's investigation, O'Day filed state income tax returns from 2006 to 2014 but had failed to file them since 2015. The same year he stopped filing tax returns, O'Day registered O'Day Transportation with the Minnesota Secretary of State. O'Day Transportation was due for registration renewal on December 31, 2016, but O'Day did not renew. As a result, O'Day Transportation's status was marked as

"inactive" on the Minnesota Secretary of State's website. Despite its "inactive" status, O'Day Transportation continued to operate and generate unreported income.

4

At the time of the Department's investigation, O'Day was listed as a registered agent of another company that was "active" and "in good standing" with the Minnesota Secretary of State, M + D Transport. M + D Transport was registered on September 23, 2020, and renewed on December 31, 2023.

Starting in July 2018, large, unexplained deposits were made into O'Day's bank accounts. Based on bank records, the Department estimated O'Day's adjusted gross income was $46,510 in 2018 and $128,884 in 2019. O'Day's bank records also suggested that O'Day repeatedly transferred funds between his personal accounts and O'Day Transportation's business accounts and used funds from all accounts to pay for personal trips, groceries, and entertainment.

Although O'Day did not pay taxes from 2020 to 2022, during those years O'Day Transportation engaged in business with Forward Air Final Mile (Forward), a logistics company that contracts with independent delivery companies to transport goods. Forward shipped items to its hub in Brainerd, and O'Day Transportation delivered these items to customers in the area. For this delivery service, Forward paid O'Day Transportation $609,709.44 in 2020; $846,025.57 in 2021; and $897,320.81 in 2022, which Forward documented in three 1099-NEC forms.¹These forms, however, were not added to Gentax, a database the Department uses to identify income individuals and registered

5

businesses receive, because O'Day Transportation was not actively registered with the State of Minnesota at the time.

In addition to income from O'Day Transportation, in 2021 and 2022, O'Day earned $107,980.48 from gambling. Although he reported these winnings on 1099-G forms, he never paid taxes for them.

Based on O'Day's financial records, the Department estimated that he owed the State over $97,000 in back taxes, interest, and penalties.

Following the investigation, the State charged O'Day with five counts of felony failure to file tax returns, under Minn. Stat. § 289A.63, subd. 1(a), and five counts of felony failure to pay taxes, under subdivision 1(b), for tax years 2018 through 2022. O'Day moved to dismiss all 10 counts for lack of probable cause, arguing that his failure to file tax returns and pay taxes, standing alone, did not constitute felony violations because the State failed to present evidence of any affirmative act of evasion beyond the failures to file and pay themselves. The district court agreed with O'Day and dismissed the entire complaint for lack of probable cause.

In a pretrial appeal to the court of appeals, the State challenged the dismissal, arguing that the district court erred by conflating the actus reus²and the mens rea³of felony tax evasion under section 289A.63 when it held that the State must prove

2 Actus reus is Latin for "guilty act." State v. Rogers, 925 N.W.2d 1, 10 (Minn. 2019) (Thissen, J., dissenting) (citing Actus Reus, Black's Law Dictionary (10th ed.

6

additional evasive acts beyond O'Day's failure to file returns or pay taxes. The State contended that the actus reus for gross misdemeanor and felony tax evasion is the same— failing to file a return or pay a tax when required to do so. The State argued that the distinction between the two levels of offense turns on the defendant's mens rea. In the State's view, a knowing failure to file a return or pay a tax constitutes a gross misdemeanor, whereas the same conduct becomes a felony when committed with the specific intent to evade a tax obligation.

The court of appeals agreed with the State. State v. O'Day, 25 N.W.3d 893, 898- 99 (Minn. App. 2025). The court held that, to establish felony tax evasion, the State must prove "the defendant knew they were obligated to file a tax return or pay taxes due, did not satisfy their tax obligation, and failed to do so with the purpose to evade or defeat their tax obligation." Id. at 900 (emphasis added). According to the court, "no separate evasive act is required." Id. Applying its interpretation to O'Day's case, the court of appeals reversed the district court's pretrial order dismissing the complaint because

"[f]rom the facts alleged in this record, a jury could infer that O'Day failed to satisfy his tax obligations with the purpose to evade or defeat them." Id. at 901. We granted O'Day's petition for further review, and we address both the meaning of the statute and whether, under the properly interpreted statute, there is probable cause to support O'Day's felony charges.

7

ANALYSIS

I.

Minnesota Statutes section 289A.63, subdivision 1, creates gross misdemeanor and felony criminal offenses for failing to file a tax return and failing to pay a tax. The subdivision provides, in full:

(a) A person required to file a return, report, or other document with the commissioner, who knowingly, rather than accidentally, inadvertently, or negligently, fails to file it when required, is guilty of a gross misdemeanor. A person required to file a return, report, or other document who willfully attempts in any manner to evade or defeat a tax by failing to file it when required, is guilty of a felony.

(b) A person required to pay or to collect and remit a tax, who knowingly, rather than accidentally, inadvertently, or negligently, fails to do so when required, is guilty of a gross misdemeanor. A person required to pay or to collect and remit a tax, who willfully attempts to evade or defeat a tax law by failing to do so when required, is guilty of a felony.

Minn. Stat. § 289A.63, subd. 1 (emphasis added).⁴This case requires us to interpret the statutory phrases emphasized above—"willfully attempts in any manner to evade or defeat a tax by failing to file it when required," in Minn. Stat. § 289A.63, subd. 1(a), and

"willfully attempts to evade or defeat a tax law by failing to do so when required," in subd. 1(b)—to determine what differentiates the felony from the gross misdemeanor offense.⁵

8

O'Day argues that "willfully attempts to evade or defeat" is the actus reus requirement in the felony offense, and that it requires proof of an evasive act other than simply failing to file a return or pay a tax. The State argues that the phrase is a mens rea requirement. According to the State, the felony requires the State to prove that a person failed to file a return or pay a tax with the specific intent to evade or defeat one's tax obligation.

Central to this case, then, is the meaning of the statutory phrase "willfully attempts to evade or defeat." "Statutory interpretation presents a question of law that we review de novo." State v. Bakken, 883 N.W.2d 264, 267 (Minn. 2016). When interpreting a statute, the first step is to determine whether the statutory language is ambiguous. State v. Thonesavanh, 904 N.W.2d 432, 435 (Minn. 2017). "Statutory language is ambiguous only if, as applied to the facts of the particular case, it is susceptible to more than one reasonable interpretation." Dupey v. State, 868 N.W.2d 36, 39 (Minn. 2015). To determine whether a party's plain reading of a statute is reasonable, we look to the text and textual context of the statute and construe the words and phrases "according to rules of grammar and … their common and approved usage." Minn. Stat. § 645.08(1); interpretation of "in any manner" that materially differentiates the two provisions. The State broadly argues that the addition of "in any manner … does not appear to be relevant. If anything, the inclusion of that language demonstrates the Legislature's intent to broaden liability under that provision." But the State makes no further argument in support of this proposition. O'Day does not address the distinction at all. Because neither party meaningfully argues that this phrase affects the interpretation of the statute, we leave the interpretation of that particular phrase for another day. For brevity, we use the wording in subdivision 1(b)—"willfully attempts to evade or defeat"—to refer to the phrases in both provisions when addressing them together.

9

see State v. Letourneau, 23 N.W.3d 386, 391 (Minn. 2025). We "may consult dictionary definitions as part of [this] inquiry." State v. Beganovic, 991 N.W.2d 638, 643 (Minn. 2023). We may also apply the canons of interpretation, including "the whole-statute canon, and the canon against surplusage." Hagen v. Steven Scott Mgmt., Inc., 963 N.W.2d 164, 170 (Minn. 2021) (citations omitted).

Guided by these principles, we begin our analysis by considering whether the parties' interpretations are reasonable. For the reasons explained below, we determine that neither party's interpretation is reasonable—O'Day's construction is contrary to the plain language, and the State's interpretation fails to meaningfully distinguish between the felony and gross misdemeanor-level offenses. Instead, accounting for the flaws in both parties' interpretations, and based on the plain language of the statute, we conclude that the felony offense of tax evasion requires the State to prove that a defendant failed to file a tax return or pay a tax with the purpose of deceiving the government regarding a tax obligation.

A.

O'Day argues that the actus reus of the felony offenses charged is not the act of failing to file a return or pay a tax but is instead "attempting to evade" filing or payment. According to O'Day, this means that "the State was required to allege another act or behavior in addition to mere passivity of failing to file and pay to establish probable cause," as the district court held.

O'Day reads the statute as prohibiting the act of attempting to commit a crime without requiring completion—i.e., the attempt itself is the crime. O'Day defines

10

"attempt" as "[a]n effort or endeavor to accomplish a crime, amounting to more than mere preparation or planning for it, and which, if not prevented, would have resulted in … full." Using this definition, O'Day contends that the criminal act at issue is

"attempting to evade" filing a return or paying a tax. Under O'Day's interpretation, criminal liability for felony tax evasion "require[s] some overt or affirmative act taken by the taxpayer that manifests evasive action" distinct from the failure to file a return or pay a tax.

This interpretation is contrary to the statute's plain language. Minnesota Statutes section 289A.63, subdivision 1(a), states: "A person required to file a return, report, or other document who willfully attempts in any manner to evade or defeat a tax by failing to file it when required, is guilty of a felony." (Emphasis added.) Subdivision 1(b) similarly provides: "A person required to pay or to collect and remit a tax, who willfully attempts to evade or defeat a tax law by failing to do so when required, is guilty of a felony." (Emphasis added.) The parties agree that the preposition "by," as used here, means "through the means or instrumentality of" or "through the agency or action of."

See also Walgreens Specialty Pharm., LLC v. Comm'r of Revenue, 916 N.W.2d 529, 535 (Minn. 2018) (quoting Webster's Third New International Dictionary 307 (2002) and The American Heritage Dictionary of the English Language 255 (5th ed. 2011)). Applying this definition of "by" to the statutory language at issue, subdivision 1(a) reads: "A person required to file a return, report, or other document who willfully attempts in any manner to evade or defeat a tax [through the means or action of failing to file it] when required, is guilty of a felony." Subdivision 1(b) reads: "A person required to pay or to

11

collect and remit a tax, who willfully attempts to evade or defeat a tax law [through the means or action of failing to pay or to collect and remit a tax] when required, is guilty of a felony." And grammatically, the phrase following "by" describes the conduct through which a defendant seeks to accomplish the result or goal. In other words, failing to either file a return or pay a tax is the means or action by which a person commits a crime. The result or goal of the criminal act of failing to file a return or pay the tax is set out in the language preceding "by"—i.e., attempting to evade or defeat a tax or a tax law. O'Day's interpretation thus confuses the criminal act with the goal and is not a reasonable interpretation of the statute.

O'Day argues that his interpretation is consistent with the United States Supreme Court's decision in Spies v. United States, 317 U.S. 492, 493-94, 498 (1943), which interpreted the phrase "willfully attempts in any manner to evade or defeat any tax imposed" in the federal tax code, 26 U.S.C. § 145(b) (1940).⁶In Spies, the Court

12

determined that this phrase requires proof of an affirmative evasive act. Id. at 494 n.2,

498. But Spies is inapposite to our analysis with respect to whether "willfully attempts to evade or defeat" constitutes the felony's actus reus in Minn. Stat. § 289A.63, subd. 1, because the context of the phrase in the federal tax code is significantly different from its context in Minnesota's statute.

Even though both the federal tax code and Minn. Stat. § 289A.63, subd. 1(a), include the phrase "willfully attempts in any manner to evade or defeat" a tax, each employs the language in a different way. Under the federal code, "any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall … be guilty of a felony[.]" According to the Supreme Court, the

"attempt" in the federal tax statute is an "independent crime," and it is "complete in its most serious form when the attempt is complete and nothing is added to its criminality by success or consummation, as would be the case, say, of attempted murder." Spies,

(b) Failure to collect and pay over tax, or attempt to defeat or evade tax. Any person required under this chapter to collect, account for, and pay over any tax imposed by this chapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution. (Emphasis added.)

Since the 1940s, Congress has amended and re-codified this federal tax statute that the Supreme Court considered in Spies. The current federal tax evasion statute is codified as 26 U.S.C. §§ 7201-7203. The statutory phrase at issue—"willfully attempts in any manner to evade or defeat any tax"—remains in 26 U.S.C. § 7201.

13

317 U.S. at 498-99. While Congress did not designate the act by which one must attempt to evade or defeat a tax obligation to be found guilty under federal law, Minnesota's Legislature did, specifying in our statute that, to be criminal, tax evasion must be accomplished "by failing to file [a tax return]" and "by failing to [pay, or to collect and remit a tax]." Contrary to the felony offense the Supreme Court interpreted in Spies, the plain language of our statute sets forth that the means of committing the crime of felony tax evasion is the act of failing to file a return or pay a tax. O'Day's interpretation, relying on Spies, ignores this distinction in the statutory language—and thus the plain language of our statute. We must avoid interpretations that make phrases superfluous, void, or insignificant. State v. Thompson, 950 N.W.2d 65, 69 (Minn. 2020). Thus, we interpret the phrases "by failing to file [a tax return]" in subdivision 1(a) and "by failing to [pay, or to collect and remit a tax]" in subdivision 1(b) as requiring the State to establish that a person attempted to evade or defeat a tax by taking specific actions—failing to file a return or pay a tax. See Thompson, 950 N.W.2d at 69 ("[W]e attempt to avoid interpretations that would render a word or phrase superfluous, void, or insignificant, thereby ensuring each word in a statute is given effect."). In other words, the act the statute prohibits is the failure to file a return or pay a tax. O'Day's contrary interpretation is not reasonable.

B.

Next, we consider the State's interpretation of the statute. Because both the gross misdemeanor and felony provisions of Minn. Stat. § 289A.63, subd. 1, prohibit failing to file a return and failing to pay a tax, the State argues that the actus reus is the same for

14

both offenses—failing to file a return or pay a tax. According to the State, what distinguishes the level of offense is the mens rea requirement. The State begins its interpretation of the required mens rea by defining "willfully,"

citing our opinion in State v. Bowers, 228 N.W. 164, 165 (Minn. 1929), which interpreted

"willfully" in a then-existing assault statute as committing an act "with a bad purpose or an evil intent." The "bad purpose" here, the State argues, is attempting to evade or defeat a tax or tax law. In the State's view, "knowingly" is the required mens rea for a gross misdemeanor, whereas "with a willful purpose to evade or defeat a tax law" is the required mens rea for a felony.

The State then argues that because tax evasion in our statute requires a particular actus reus (failing to file a return or pay a tax), it "requires the State to prove that a singular act—failing to file or pay—was done with a particular mental state—that of purposefully evading a tax obligation." In drawing this conclusion, the State focuses on the preposition "by" in the phrases "by failing to file [a tax return]" and "by failing to [pay, or to collect and remit a tax]." Because "by" means "through the means or instrumentality of," the State interprets the phrases following "by" as specifying the required criminal act—failing to file a tax return or pay a tax. In other words, the State asserts a person commits the felony by having the willful purpose of evading or defeating a tax when they fail to file a return or pay a tax.

O'Day criticizes this approach, arguing that if the Legislature had intended the phrase "willfully attempts to evade or defeat" to be a mens rea requirement, it would have used the word "intent" instead of "attempt." We disagree that the Legislature must use the

15

word "intent" rather than "attempt" to create a mens rea requirement. Generally,

"criminal offenses require both an actus reus and a mens rea." Underwood v. State,

25 N.W.3d 26, 37 (Minn. 2025). While the actus reus is the guilty act, the mens rea "is the element of a crime that requires the defendant know the facts that make his conduct illegal." Id. (citation omitted) (internal quotation marks omitted). Indeed, we have stated that "some positive indication of legislative intent is required to dispense with mens rea."

State v. Ndikum, 815 N.W.2d 816, 818-19 (Minn. 2012). In the gross misdemeanor provisions for tax evasion, the Legislature requires a mens rea of "knowingly." Minn. Stat. § 289A.63, subd. 1(a), (b). In other words, the State must prove a person knowingly failed to file a return or pay taxes. But the only language in the felony offenses relevant to mens rea is the language at issue here—"willfully attempts to evade or defeat." See id. As we pointed out in Bowers, "willfully" is used to describe a person's intent. 228 N.W. at 165 ("The most common definition of the word 'willfully,' as used in a penal statute, is that it means with a bad purpose or an evil intent."). Because "willfully" is language indicating a required intent and this is the only language in the felony provision that might provide the mens rea requirement, we interpret the phrase "willfully attempts to evade or defeat" as doing precisely that.

For the reasons set forth above, we agree with the State that the language

"willfully attempts to evade or defeat" imposes a mens rea requirement and that the actus reus of the felony offense is the failure to file returns or pay taxes.⁷

16

phrase "willfully attempts in any manner to evade or defeat" to distinguish felonies from gross misdemeanors by requiring a higher mental state. See Peterson v. W. Nat'l Mut. Ins. Co., 946 N.W.2d 903, 910 n.3 (Minn. 2020) (noting that while unnecessary to the plain language analysis, the legislative history confirmed the court's holding). The statutory language "willfully attempts in any manner to evade or defeat any tax" was first adopted in 1983. See Act of June 7, 1983, ch. 294, § 1, 1983 Minn. Laws 1506, 1507 (codified at Minn. Stat. § 290.53, subd. 4(c) (Supp. 1983)). The 1983 statute was strikingly similar to the federal statute the Supreme Court interpreted in Spies. The 1983 tax evasion statute provided criminal liability for failure to file a return or pay a tax as follows:

Subd. 4. Failure to file, filing false or fraudulent return; intent to evade tax; criminal provisions. In addition to any other penalties prescribed, (a) any person required by this chapter to make a return, who knowingly fails to make it at the time required by law, is guilty of a gross misdemeanor; (b) any person who willfully makes and subscribes any return, statement, or other document which he knows to be false as to any material matter is guilty of a felony; (c) any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter is guilty of a felony; and (d) any person who willfully fails to pay the tax at the time required by law, with the intent to evade or defeat the tax, is guilty of a gross misdemeanor unless the tax involved exceeds $300, in which event he is guilty of a felony.

Minn. Stat. § 290.53, subd. 4 (Supp. 1983) (emphasis added).

In 1990, to simplify and recodify state tax law, the Legislature passed a lengthy bill. See Act of Apr. 20, 1990, ch. 480, art. 1, § 27, 1990 Minn. Laws 1033, 1080-81 (codified at Minn. Stat. § 289A.63, subd. 1 (1990)); see also Briefly: The Minnesota Senate Week in Review (Feb. 16, 1990). One of the problems with the prior language the senate committee identified was the "inconsistency" between the "standards of intent"

and "the severity of penalties" for similar offenses related to failure to file returns and pay taxes. See Hearing on S.F. 1653, S. Judiciary Comm., 76th Minn. Leg., Mar. 5, 1990 (Exhibit A presented by Minnesota Department of Revenue). Under the then-current statute, any person who "knowingly" failed to file a tax return was guilty of a gross misdemeanor, but "any person who willfully fail[ed] to pay the tax … with the intent to evade or defeat the tax," was also guilty of a gross misdemeanor, unless the tax involved exceeded $300. Minn. Stat. § 290.53, subd. 4 (1988).

To resolve this inconsistency in intent requirements, the Legislature kept the phrase "willfully attempts in any manner to evade or defeat," but instead of using it to define an independent attempt offense, it used the language to describe an attempt that is committed through the act of failing to file a return or pay a tax. Compare Minn. Stat. § 290.53, subd. 4 (1988) ("any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter is guilty of a felony"), with Minn. Stat. § 289A.63,

17

We conclude, however, that the State's interpretation of the mens rea required is not reasonable because reading this phrase to require the State to prove specific intent to evade or defeat fails to meaningfully distinguish between the felony and misdemeanor offenses. See State v. Galvan-Contreras, 980 N.W.2d 578, 585 (Minn. 2022) (concluding that the State's interpretation of a criminal statute was unreasonable, in part, because it

"effectively remove[d] the meaningful mens rea distinction between the gross misdemeanor and felony offenses").

The problem with the State's interpretation is its definition of "evade." The State argues that "evade" means "to escape or avoid." The American Heritage Dictionary of the English Language 614 (5th ed. 2011) (defining "evade" as "to escape or avoid"). Under Minnesota's tax evasion statute, both the gross misdemeanor and felony offenses are committed by the actus reus of failing to file returns or pay taxes. The distinguishing element is the mental state required to commit either a gross misdemeanor or a felony. Under the State's interpretation, a person commits the gross misdemeanor offense when they "knowingly" fail to file a return or pay taxes; the offense is a felony when a person fails to file a return or pay a tax "with the purpose of attempting to evade the tax subd. 1 (1990) ("A person required to file a return, report, or other document who willfully attempts in any manner to evade or defeat a tax by failing to file it when required, is guilty of a felony."). In addition, the Legislature eliminated the section which made it either a gross misdemeanor or a felony to "willfully fail[] to pay" a tax "with the intent to evade or defeat," depending on whether the tax exceeded $300. Compare Minn. Stat. § 290.53, subd. 4(d), with Act of Apr. 20, 1990, ch. 480, art. 1, § 27, 1990 Minn. Laws 1033, 1080-81 (codified at Minn. Stat. § 289A.63, subd. 1 (1990)). This new language is identical to the subdivision we interpret today. See Minn. Stat. § 289A.63, subd. 1 (1990).

18

obligation." But the distinction between failing to file returns or pay taxes "knowingly"

or with "the purpose of attempting to escape or avoid the tax obligation" is tenuous at best.

While the criminal code does not define "knowingly," it does provide that to

" '[k]now' requires only that the actor believes that the specified fact exists." Minn. Stat. § 609.02, subd. 9(2). "Knowingly," in the gross misdemeanor provision of the tax evasion statute, describes one specific aspect of how the defendant must fail to file a return or pay a tax—the defendant must fail to file or pay with the knowledge that they are required to file returns or pay taxes. See State v. Mikulak, 903 N.W.2d 600, 603-04 (Minn. 2017) (concluding that the language of the predatory offender registration statute making it a crime to "knowingly violate[]" that statute made knowledge of the law at the time of the violation an element of the offense (citation omitted) (internal quotation marks omitted)). If "evade" means, as the State suggests, to avoid or escape, then any person who knows they are required to file a return or pay taxes but does not has arguably failed to file or pay with the intent of escaping or avoiding a tax obligation. Put differently, any person who commits the singular act of failing to either file a return or pay taxes knowing they have the obligation to do so risks a conviction under both the gross misdemeanor and felony provisions if "evade" can mean simply avoiding a tax obligation. Consequently, although we agree with the State that "willfully attempts to evade or defeat" a tax describes the required mental state, we also agree with O'Day that the State's interpretation is unreasonable because it fails to meaningfully distinguish between the felony and gross misdemeanor offenses.

19

C.

Because we conclude both parties' interpretations are flawed, we consider whether there is another reasonable reading of the phrase "willfully attempts to evade or defeat" a tax. See State v. Heiges, 806 N.W.2d 1, 16 (Minn. 2011), abrogated on other grounds by, State v. Holl, 966 N.W.2d 803, 811-14 (Minn. 2021) (considering a third way to read statute after concluding that both parties' interpretations were "flawed"). As we observed above, the problem with the State's interpretation of § 289A.63 is that defining "evade"

as "to escape or avoid" fails to meaningfully distinguish between the two levels of offense. But there is another way to interpret "evade." Besides "to escape or avoid,"

"evade" also means to "circumvent," which in turn is defined as "to manage to get around esp[ecially] by ingenuity or stratagem."⁸Merriam-Webster Collegiate Dictionary 432, 225 (11th ed. 2003) (defining "evade" and "circumvent"). "Evade" is also defined as using "cleverness or deceit in avoiding or escaping something." The American Heritage Dictionary of the English Language 614 (5th ed. 2011). Each of these definitions clarifies the State's overly broad definition of "to escape or avoid" by adding a component of trickery or deception. We conclude that it is this component of trickery or deception that elevates the offense to a felony. If we interpret "willfully attempts to evade or defeat" a tax or tax law by failing to file a return or pay a tax as failing to file or pay with the purpose of deceiving the government regarding a tax obligation, there is a clear distinction between the gross misdemeanor and felony offenses.

20

In addition, construing "evade" to require a component of deceit is consistent with the United States Supreme Court's discussion in Spies of the types of conduct from which a motive to evade taxes may be inferred. 317 U.S. at 499. Because our statute requires the guilty act of failing to file a return or pay a tax, we observed above that Spies is inapposite to our analysis with respect to whether "willfully attempts to evade or defeat"

constitutes the felony's actus reus. But the Supreme Court's analysis of the "tax-evasion motive" implied by this phrase remains relevant to our analysis of the mens rea required here. After concluding that the context in which this phrase appeared required proving an affirmative act of attempt, the Spies Court observed that an "affirmative willful attempt may be inferred from conduct" which would have "the likely effect … to mislead or to conceal." Id. at 499 (listing, as examples of such conduct "keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one's affairs to avoid making the records usual in transactions of the kind"). The Supreme Court further observed, "[i]f the tax-evasion motive plays any part in such conduct the offense may be made out even though the conduct may also serve other purposes such as concealment of other crime." Id. In other words, conduct that has "the likely effect" of misleading or concealing constitutes proof of tax evasion if the motive is to evade a tax. Misleading and concealing are both forms of deception. Defining "evade," then, as requiring a component of deceit is consistent with Spies's discussion of the type of conduct—evidence that misleads or conceals—that might constitute evidence of a motive to evade taxes.

21

It is reasonable to read the phrase "willfully attempts to evade or defeat" in the context of Minnesota's statute as requiring proof that a defendant failed to file a tax return or pay a tax with the purpose of deceiving the government regarding a tax obligation. We conclude that the statute is unambiguous because this is the only reasonable interpretation. We therefore hold that the felony offense of tax evasion requires the State to prove that a defendant failed to file a tax return or pay a tax with the purpose of deceiving the government regarding a tax obligation.⁹

II.

We now consider whether the State alleged facts sufficient to establish probable cause that O'Day failed to file returns and pay taxes with the purpose of deceiving the government regarding his tax obligations. "When a district court dismisses a charge for lack of probable cause based on a legal determination, we review the district court's decision de novo." Letourneau, 23 N.W.3d at 396.

"Probable cause for a charge exists where facts submitted to the district court show a reasonable probability that the person committed the crime." Id. A district court must deny a motion for lack of probable cause if "the facts appearing in the record, including

22

reliable hearsay, would preclude the granting of a motion for a directed verdict of acquittal if proved at trial." State v. Florence, 239 N.W.2d 892, 903 (Minn. 1976). "In other words, if the facts before the district court present a fact question for the jury's determination on each element of the crime charged, the charge will not be dismissed for lack of probable cause." State v. Lopez, 778 N.W.2d 700, 704 (Minn. 2010) (citation omitted) (internal quotation marks omitted).

The Department's investigation revealed that O'Day had significant income from 2018 to 2022, requiring him to file tax returns and pay taxes. But he did not file any returns or pay taxes from 2018 to 2022. O'Day does not dispute his failure to file returns or pay taxes during these five years but argues that the State lacks probable cause because it introduced no evidence to establish O'Day's willful attempt to evade or defeat a tax beyond his failure to file returns and pay taxes. We disagree.

As we concluded above, to establish that O'Day willfully attempted to evade or defeat a tax the State is required to prove that O'Day willfully attempted to deceive the government regarding his tax obligation when he failed to file returns and pay his taxes. The State submitted sufficient evidence to present a fact question as to whether O'Day intended to deceive the government regarding his tax obligations. See Lopez, 778 N.W.2d at 704.

The State submitted the following evidence: O'Day consistently filed returns and paid his state income taxes from 2006 to 2014 but stopped filing them in 2015. That same year, he registered O'Day Transportation with the Minnesota Secretary of State. O'Day Transportation's registration expired in 2016, and O'Day never renewed it. He did,

23

however, renew the registration for another business for which he is a registered agent, M + D Transport, in 2023.

Due to O'Day's failure to renew its registration, O'Day Transportation was marked as "inactive" on the Minnesota Secretary of State's website. While on "inactive"

status, O'Day Transportation continued to engage in business with logistics company Forward and received over two million dollars in payments from 2020 to 2022. Because O'Day Transportation was not actively registered with the State of Minnesota at the time, the Department's Gentax database for identifying income did not include the 1099-NEC forms that Forward issued detailing the payments made to O'Day Transportation between 2020 and 2022. O'Day also commingled his personal funds and O'Day Transportation's business funds by repeatedly transferring funds between his personal and business bank accounts, which made it difficult for the Department to track and determine his gross and adjusted gross income.

Taken together, this evidence is sufficient to present a fact question as to whether O'Day intended to deceive the government regarding his obligations to file returns and pay taxes by misleading it regarding those obligations and concealing taxable income. Accordingly, the district court erred in dismissing O'Day's felony charges under Minn. Stat. § 289A.63, subd. 1.

CONCLUSION

For the foregoing reasons, we affirm the decision of the court of appeals and remand to the district court for further proceedings consistent with this opinion. Affirmed.

24

ALIGADA, Jr., J., not having been a member of the court at the time of submission, took no part in the consideration or decision of this case.