Wesley Snipes, best known for his roles in Demolition Man, U.S. Marshals, and Blade has had some widely publicized issues with the Internal Revenue Service over the past few years. Mr. Snipes’ trouble with the IRS started in 2008 when he was convicted of three misdemeanor counts of neglecting to file his tax returns. This ignited a battle that still rages today as he attempts to force the IRS to honor its original Offer in Compromise Program and Fresh Start Initiative with a $17.5 million lawsuit.
To many, it comes as no surprise that Mr. Snipes is in court again. Over the years, he has become one of the most high-profile cases of tax evasion and has been charged with multiple felony tax evasion charges. When charged in 2008, it was a partial victory for Snipes as he was not found guilty of the most serious felony charges. He did, however, serve jail time which he carried out from December of 2010 to April of 2013. It was reported that between 1999 and 2001, Snipes owed $7 million in taxes.
While Snipes did serve his jail time, his acquittal from charges of felony tax fraud and conspiracy remained his largest legal victory. Snipes tried everything to have his sentence overturned, filing an appeal and citing reasons of race for not being able to get a fair trial in Ocala, Florida; this was rejected by the U.S. Supreme Court.
Snipes’ most current issue with the IRS is over civil tax collections. Not only does the IRS want to collect the owed amounts for the criminal court orders, it can also assign other tax bills to offenders. Snipes claimed that he was trying to work with the IRS at resolving his tax debts and move forward. When Snipes had just finished his jail time in 2013, the IRS hit him with large-scale tax assessments extending back 10 years. In response to this, Snipes sought a Collection Due Process Hearing and paid two of the assessment amounts from 1999 and 2002. He then offered to settle the amounts from five additional years.
While Snipes’ lawyers attempted to work with the IRS, an agreement was reached that Snipes would pay a total amount of $6,416,396. When the IRS increased that figure to $18,116,396, Snipes asserted that they were abusing their power. Snipes drew attention to the claimed nature of the IRS Compromise Program as he felt its goal of reaching a resolution beneficial for both the taxpayer and the government was not being prioritized. Snipes claimed that the supposed end-goal of resolving the tax disputes in an attempt to move forward with the taxpayer in compliance was not being honored, and that he was being deprived of the chance of a fresh start.
In May of 2012, the IRS launched the ‘Fresh Start Initiative’. This initiative revised the former Compromise Program to make its mandates more flexible and productive to those it aimed at helping. Under the Fresh Start Initiative, those taxpayers who are the most financially distressed are offered various resolutions towards solving the tax disputes enabling all involved to move forward.
In his $17.5 million lawsuit against the IRS, Wesley Snipes claims that the Fresh Start Initiative is not following through with its proposed goal of providing a fresh start for those who fall under its umbrella. Snipes claims that after he and his lawyers had attempted to work with the IRS in resolving his tax evasion issues, he was met with arbitrary determinations in the form of back-tax assessments. Snipes now seeks the help of the court in forcing changes within the IRS in these matters.
In all my years as a tax attorney in San Jose, I’ve never seen a case quite like that of Mr. Snipes. We have been covering this case on our blog for quite some time now, and we look forward to reporting back with the results of this new lawsuit. Stay tuned!
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