Tax Prophet Newsletter January, 2008

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The Tax Prophet Newsletter

Issue # 57 January, 2008

REDUCE TAXES! CHECK OUT THE TAX PROPHET'S Action Guides In This Issue: Introduction The Trial Conspiracy Snipe's Defense Justice?		The Wesley Snipes Trial Introduction On February 1, 2008, a Florida jury acquitted actor Wesley Snipes of felony tax-fraud and conspiracy charges, but convicted him of failing to file tax returns. Snipes faces a maximum of three years in prison, plus repayment of all taxes due, plus penalties and interest. The original felony charges, however, carried a maximum 16-year prison sentence so the verdict represents a victory for Snipes.

The Trial		Although he earned more than $58 million during tax years 1999 through 2005, Snipes decided to stop filing tax returns for those years. Snipes claimed the tax code did not apply to him, failed to withhold taxes from his employees' paychecks and attempted to pay his tax liability with several worthless "bills of exchange" totaling $14 million, drawn on a fictitious bank account. He also wrote a threatening letter to government officials, attaching 600 pages of tax protester gibberish, and filed for $7 million refund on taxes paid in 1997, claiming the tax code did not apply to him. Despite his acquittal on felony criminal charges, Snipes owes approximately $35 million in taxes, penalties and interest, which means his worldly possessions, including income rights from his movies, could be subject to IRS seizure and sale.
Conspiracy		Snipes hooked up with two notorious tax protestors, Eddie Ray Kahn and Douglas P. Rosile, founders of the tax protest group originally called American Rights Litigators. The government brought conspiracy changes against all three individuals, but the jury convicted only Kahn and Rosile of felony tax fraud and conspiracy.
Snipe's Defense		Snipes failed to call any witnesses, although his witness list included Sylvester Stallone, Goldie Hahn and Barbara Walters (all tax experts, I'm sure). In closing arguments, his attorneys acknowledged that Snipes tax views were crazy and dead wrong; however, they claimed he was duped by Kahn and Rosile into believing that he did not owe taxes - and to a large extent, the jury agreed.
Justice?		According to JJ MacNab, who writes about the tax protester movement in the U.S. and sat through the trial (see: The Snipes Trial), the verdict distinguishes between the promoters of tax scams and their followers. The jury threw the book Kahn and Rosile, but was much more forgiving towards Snipes. While Snipes, in all probability, will be looking at months instead of years in jail, he still faces an enormous tax bill. Nevertheless, he was acquitted of all felony charges and should be grateful for the jury's lenient verdict.

All contents copyright Š 2008 Robert L. Sommers, attorney-at-law. All rights reserved. This newsletter provides information of a general nature for educational purposes only and is not intended to be legal or tax advice. This information has not been updated to reflect subsequent changes in the law, if any. Your particular facts and circumstances, and changes in the law, must be considered when applying U.S. tax law. You should always consult with a competent tax professional licensed in your state with respect to your particular situation. The Tax Prophet Ž is a registered trademark of Robert L. Sommers.