Monday, March 12, 2007

This is what not to do with the IRS... I say fight not flight...

E! News
Wesley Snipes Feels Blade of IRS
by Gina SerpeTue,
17 Oct 2006

White men can't jump. And Wesley Snipes apparently can't figure out a 1040 form.
The Blade star was indicted in Tampa Tuesday on eight counts of tax fraud for allegedly trying to bilk $12 million in fraudulent refunds out of the federal government, for claiming his income was immune from taxation and for failing to file any returns for six years.
If convicted on all charges, the actor could face up to 16 years in prison—though they'll have to catch him first. Last week the U.S. Attorney's office issued a warrant for Snipes' arrest after federal authorities were unable to locate him.
Snipes faces charges of conspiracy to defraud the Internal Revenue Service, presenting a fraudulent claim for payment to the IRS, as well as six counts of failing to file income tax returns. The former two charges carry a maximum penalty of five years in prison, while the other six counts carry one year each.
"The Justice Department will vigorously investigate charges of counseling or committing tax fraud," Assistant Attorney General Eileen J. O'Connor said at a news conference.
According to the indictment, unsealed this morning and posted online by the Smoking Gun (, the 44-year-old actor attempted to seek the eight-figure refund in 1996 and 1997 as part of an ongoing tax scam.
Federal investigators claim the fraud was perpetrated with the help of Eddie Ray Kahn and Douglas Rosile. Kahn is the founder of two organizations—Florida's American Rights Litigators and Guiding Light of God Ministries—which, per the indictment, "promoted and sold fraudulent tax schemes." Rosile is an accountant for the former company.
Federal investigators allege that Snipes, Kahn and Rosile knowingly conspired to cheat the government "through deceit, craft, trickery and dishonest means," by the use of false documents and illicit tax-shelter companies to ensure that the star would not only avoid paying income taxes but also pocket a sizeable refund.
Per court documents, investigators claim Kahn told Snipes that U.S. citizens could only be taxed on income earned from foreign jobs and not from money made within the country, a so-called loophole he deemed the "861 Argument."
In return for this sound financial advice, and for filing the appropriate get-out-of-tax-free forms to the IRS, American Rights Litigators received 20 percent and untold amounts of fees, on Snipes' multimillion-dollar refunds. The 861 Argument has been routinely debunked by legitimate tax lawyers, accountants and the IRS.
But, according to the feds, that didn't stop Snipes from attempting to collect a $12 million refund on income taxes he had already paid. Additionally, the IRS claims the actor allegedly used the same fraudulent logic to avoid filing a tax return altogether from 1999 to 2004.
According to the indictment, in lieu of actual payment, Snipes and cohorts presented the government with something called "Bills of Exchange." While presented under the guise of having been issued by financial institutions by authority of the government, the documents were simply printed by the American Rights Litigators and, while apparently authentic-looking, they held no monetary value.
In 2001, the IRS received a Bill of Exchange in the amount of $12 million, along with a tax form bearing Snipes' name and Social Security number. The following year, the agency claimed to have received a Bill of Exchange from the actor in the amount of $1 million as payment for his taxes.
The indictment, which chronicles the IRS' dealings with Snipes, and the American Rights Litigators from 2000 to 2004, states that the government made several attempts to contact the White Men Can't Jump star regarding his status as a taxpayer only to receive more false documentation from Kahn's company.
"Our system of government depends on citizens paying their fair share of taxes," U.S. Attorney Paul I. Perez said. "Those who intentionally and unlawfully harass the IRS through deceit, trickery and fraud undermine the collection of revenue that is vital to every aspect of the operation of our government."
The indictment was filed in Florida because Snipes owns a home in the affluent town of Windermere.
This is not the first time Snipes has been implicated in tax fraud. In 2002, the Justice Department filed suit against Rosile, who, among other apparently bogus tax claims, sought a refund of roughly $7.3 million for Snipes, after resubmitting the actor's 1997 return—the year he starred in the hit thriller Murder at 1600—to show an adjusted gross income of zero dollars.
And income isn't the only type of tax Snipes has an aversion to. Last year, the star almost lost his Florida estate after failing to pay more than $20,000 in back property taxes. Two years earlier, the bank put the $1.7 million home into foreclosure after Snipes ceased making payments.
While the feds say they don't know the whereabouts of Snipes, Rosile has turned himself in, and reports that investigators believe Kahn may have high-tailed it to Panama.

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