Celebrity Tax Tuesday - Wesley Snipes Taking On The IRS Again
Wesley Snipes is in court with the IRS, again, and this time he has gone on the offensive. He was one of the more high profile criminal tax defendants in recent memory, facing an all-out prosecution on multiple serious felony tax evasion counts. In 2008, Mr. Snipes was convicted of three misdemeanor counts of failing to file tax returns. It was a partial victory for Mr. Snipes and partial defeat for prosecutors, since he defeated the more serious felony counts.
But he got fail time, reporting to McKean Federal Correctional Institution on December 9, 2010. He finished at an adjacent minimum security Club Fed, and was released in April 2013. During 1999 through 2001, Snipes avoided $7 million in taxes. Snipes followed an accountant and an anti-tax advocate down a dangerous path. The advisers claimed they did not legally have to pay taxes.
One of Snipes’ original defenses was that he was relying on Eddie Ray Kahn and Douglas P. Rosile. They were convicted by the same jury of tax fraud and conspiracy and both got longer prison terms than Mr. Snipes. Snipes was such a well-known figure and high earner—about $40 million from 1999 to 2004—that not paying taxes was hard to fathom.
The big victory for Snipes was that he was acquitted of felony tax fraud and conspiracy. He didn’t file false tax returns. But even his misdemeanor convictions meant a sentence of up to 3 years in prison, which he got. Snipes appealed, arguing that his sentence was unreasonable. He even claimed he couldn’t get a fair trial in Ocala, Florida because of his race. Even the U.S. Supreme Court turned him down.
Mr. Snipes’ current fight with the IRS is about civil tax collections, which is yet another painful lesson he must endure. With many defendants convicted in tax cases, there is a spillover impact on their civil taxes. The IRS not only wants to collect whatever it was owed in the criminal plea agreement or court order. But the IRS may send various other tax bills too, trying to leverage off the conviction. Unfortunately the IRS usually succeeds.
The Wesley Snipes tax trial “is the unfair prosecution of innocent Americans who are coerced into following a tax code that is confusing as hell”, says Robert Barnes, who served as Wesley Snipes’ tax attorney during Snipes’ 2011 victory over the IRS. “In the Wesley Snipes tax evasion case, and in the other tax evasion cases where I’ve won against the IRS, that is the core argument.”