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INSIDE 1
Would You Spend a Dollar to Save a Quarter?
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The Most Important Question You Can Ask
Errors on Your Tax Return Aren’t Forever
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Tax Season Comes to an End!
Easy Deviled Eggs
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Hollywood’s Leading Man of Tax Fraud
Toph’s Tax Nightmares
No Blade Can Cut Through Wesley Snipes’ Tax Fraud
When people think of celebrity tax scandals, Wesley Snipes is one of the first names that comes tomind. We’ve mentioned him a time or two in the newsletter, but his trouble with the IRS runs deep. In 2006, Snipes, along with two others, were charged with“conspiring to defraud the United States.”Snipes was also charged with six counts of“willfully failing to file federal income tax returns by their filing dates”as well as filing false tax returns. Snipes received a total of eight charges. Snipes hadn’t filed tax returns between 1999 and 2004. During those years, he earned a reported $38 million that he didn’t pay federal income tax on. There was evidence that he simply decided not to pay. It wasn’t a case of hiring a bad accounting team, which is a common thread among famous individuals. When Snipes’case went to trial, his legal teammade an“861 argument.”This is a reference to Section 861 of the Internal Revenue Code that lists some of the sources of taxable income. Snipes argued his income was not taxable because the source of income wasn’t defined in Section 861. This argument is generally used by tax protesters, often to no avail because the argument is a stretch at best. Snipes’defense wanted to portray him as a“tax avoider” and not a tax evader. The courts didn’t play along.
Snipes was charged on three of the eight counts, and those three charges were misdemeanor counts of failure to file tax returns. He was acquitted on the felony count of conspiracy and filing false claims with the U.S. government. He was sentenced to three years in prison and was hit with a $17 million tax bill. In the end, he spent two years in prison and served the remainder under house arrest and had to repay his back taxes. Since then, Snipes has become a case study in tax fraud. His case was far more complex than what we can write about here— it’s almost a story worthy of its ownmovie.
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