Key West man evaded taxes on vacation rentals, investigators said

A Key West man repeatedly rented out three shortterm vacation properties without paying taxes on the income and without having a transient rental license, according to the Monroe County State Attorney’s Office.

Michael McMahon, 66, was arrested and jailed March 20 on 42 misdemeanor charges of theft of state funds under $1,000 and three felony charges of theft of state funds over $1,000.

He was also arrested on 15 felony charges of failing to file six consecutive tax returns and three misdemeanor charges of not having a vacation rental permit.

Meanwhile, McMahon owes the city of Key West $1.2 million in fines for illegal transient rentals and has been cited by Key West’s code compliance department since 2015, said Jim Young, the city’s code compliance director.

The city has put liens on his properties.

McMahon is accused of renting out his properties at 100 Admirals Lane, 28 Seaside Court South and 107 Front St., No. 217, between March 2019 and December 2020, and not paying the 5 percent tourist tax, known as the “bed tax” in the Keys, which totals about $26,500, according to a probable cause affidavit.

A forensic analysis by the Monroe County Tax Collector found the total amount of documented gross rentals paid to McMahon by Airbnb to be more than $531,000 overall on the properties, the affidavit states.

“Despite McMahon’s knowledge as to his registration and taxing obligation, McMahon made no reports to the tax collector, failed to obtain business tax receipts and failed to report any income or pay sales or use taxes on the subject properties owned by him and advertised as rental property,” according to the probable cause affidavit signed by Chris Weber, chief investigator for the Monroe County State Attorney’s Office.

On Friday, McMahon was still at the county jail on Stock Island on a $480,000 bond. The attorney listed in his court record, Alan Fowler, did not immediately return a phone message Friday.

Key West city officials have called McMahon a repeat offender when it comes to illegal transient rentals, an issue the island has grappled with for years.