If you follow celebrity news, you may have heard that Wesley Snipes has a tax trial underway in Orlando, Florida. The IRS is alleging that Mr. Snipes earned $38 million between 1999 and 2004 from appearing in more than a half-dozen movies. During this time, the IRS says that he paid $0 in taxes. The Associated Press reported that prosecutors in Snipes’ case say he claims he was not required to pay income tax.
In court papers and interviews, Snipes says he was the victim of unscrupulous advice from two known tax protestors who advised him to follow the 861 provision. The 861 provision is a popular tax argument among tax protestors. These protestors claim that provision 861 does not list wages earned in the United States as taxable. Trial and appellate courts have all rejected this interpretation and it has landed eight protestors in prison for relying on the 861 defense.
Snipes is being charged with two felonies: conspiracy to defraud the government and filing a false refund claim. Snipes is also charged with failing to file tax returns for six years starting in 1999. It has been reported Snipes maintains he is not guilty and that he acted on the advice of Douglas Rosile and Eddie Kahn, both under federal court order to stop promoting tax evasion. If convicted, Snipes could face up to 16 years in federal prison; Rosile and Kahn could face up to ten years each.
While it remains to be seen what the verdict will be in Snipes’ tax case, tax protestors and their arguments are not uncommon to the IRS. According to the IRS’ website, there are a variety of civil and criminal penalties that can be used against those who use frivolous tax arguments to avoid paying their income tax. In the eyes of the IRS, these frivolous arguments are a waste of time and money. Taxpayers or tax practitioners who use them to avoid paying their proper income tax will be penalized in one form or another.
And take it from me, we have seen some of these tax protestors end up at JK Harris for help solving their tax problems. If you feel you have received bad tax advice and need help getting back in the IRS’ good graces, contact a tax professional to find out how you can resolve your tax problems.
