Last week, the U.S. Attorney’s Office for the District of Montana announced that the owner of Highwood Creek Outfitters, a gun shop and shooting range in Great Falls, Montana, had been charged with five counts of submitting a false tax return. According to the announcement, Tommy VanHoose allegedly “skimmed cash from his firearms business and did not report 20 percent of his gross receipts to the IRS” — over $1.4 million — “which resulted in a substantial underpayment of income taxes to the United States.”
As part of their investigation, IRS agents raided Highwood Creek Outfitters last summer, causing a backlash among gun rights activists, who even set up a crowdfunding page to cover VanHoose’s legal expenses. At the time, VanHoose said he was unfairly targeted “because of the style of weapons that we have and the press that’s so against them,” referring to assault weapons. “The current administration seems to be hell-bent on getting those guns out of the hands of average Americans.”
the irs investigation
The indictment tells a different story, however. The IRS first began its investigation in February 2023, when an undercover IRS agent met with a realtor to discuss purchasing VanHoose’s business for $1.75 million. When discussing financials, the realtor allegedly said, “[N]ot everything flows to the tax returns.”
The realtor also provided IRS forms showing limited profits — just over $11,000 and $16,000 for 2020 and 2021, respectively — but said in a follow-up discussion that the “off the books” income was “substantial.”
Days later, VanHoose allegedly met with the undercover IRS agent and confirmed that there was “more than meets the eye” regarding his business income. According to the indictment, VanHoose took the undercover IRS agent on a tour of Highwood Creek Outfitters and said that “he skimmed approximately $450,000 in cash and repeatedly stated he did not report 20% of the gross receipts to the IRS.” Based on his own claims, VanHoose allegedly underreported over $1.4 million of his income, of which over $442,000 was owed to the IRS.
the role of transaction records
During the raid of Highwood Creek Outfitters, IRS agents seized firearm transaction records, known as Form 4473s, that customers and dealers must complete before selling firearms. Each form contains the customer’s personal information as well as the make, model, and serial number of the firearm being sold. The IRS’ actions drew the ire of groups backed by the gun industry, such as the National Rifle Association, which claimed that VanHoose “faced surveillance, watch list placement, and an armed IRS raid without any charges.”
Gun Owners of America (GOA), which opposes all firearm regulations and counts several gun companies as “partners,” issued a statement condemning the raid and stating that it “remains incredibly concerned about any effort by agents of the federal government to seize firearm transaction records given the nearly 1 billion records already in possession of the ATF that are being digitally transferred into a searchable database in direct contradiction to existing statute.” GOA Senior Vice President Erich Pratt went further, urging “Congress to act, including by defunding the ATF and demanding answers from the IRS.”
But these claims do not hold up to scrutiny. Federal law requires FFLs to maintain inventory records and Form 4473s while they are in business — not the ATF. This is why the ATF must often contact FFLs to trace firearms recovered from crime scenes back to their last point of sale. Only when an FFL goes out of business or surrenders its license is it required by law to send those records to the ATF. This allows the agency to continue tracing any crime guns that those FFLs may have sold in the past.
The ATF receives an average of 1.2 million out-of-business FFL records every month. However, due to lobbying from the National Rifle Association, the ATF is prohibited from creating a searchable database from those documents. Thus, the agency must search through the scanned documents manually during a trace, a time-consuming process. As ATF Director Steve Dettelbach said in an interview, “as far as I know, we are the only customer of Adobe Acrobat that actually pays extra money to have search capability taken out of that software.”
lack of oversight
VanHoose appears to have taken advantage of the lack of oversight on transaction records. According to the indictment, when the undercover IRS agent asked VanHoose how he was able to hide so much income from the federal government, VanHoose allegedly responded by saying, “It’s easy…they don’t know what I’m paying for or [what] I’m getting in income off those guns.”
When IRS agents raided Highwood Creek Outfitters, they allegedly found the “actual gun prices attached to the ATF Form 4473s” and confirmed that VanHoose charged customers “approximately $187,527” more for guns than what he entered into his company’s point-of-sale system and deposited into his bank. VanHoose also allegedly kept over $726,000 in cash from sales and did not log some firearm sales, amounting to over $572,000, in his company’s records.
The indictment alleges that VanHoose then “lied to his accountant” and “only provided his accountant with the bank account records, representing that was the extent of the business activity,” to further his scheme.
To learn more about the firearm supply chain and problematic gun dealers, click here.