Death And Taxes
Vol: 63 Issue: 9 Saturday, December 9, 2006
Actor Wesley Snipes just posted a $1 million bond after pleading not guilty to income tax evasion. The actor surrendered to federal officials after having spent two months out of the IRS’ reach while filming a movie in Florida.
Snipes, whose annual income is in the tens of millions, started taking tax advice from tax-protestor Eddie Ray Kahn. Kahn is a member of a group that questions the authority of the IRS to collect income taxes from US citizens.
Snipes was indicted for illegally seeking some twelve million dollars in fraudulent income returns, according to news reports. From 1999 to 2004, Snipes failed to file any income tax returns with the IRS whatever.
And icing the cake, Snipes allegedly sent the IRS some $14 million in bogus checks to settle his tax debt. One would think that Snipes is in a ‘heap o’ trouble’. But maybe not.
There are credible rumors of a plea deal in which Snipes agrees to pay off his tax debt in installments. In return, the IRS will not seek jail time and will allow Snipes to continue to work and travel abroad.
Supporting the rumors are the facts that Snipes was NOT required to surrender his passport when he posted his $1 million bond and was given permission to return to Africa to finish working on his film.
This would seem to be the kind of case that prosecutors salivate over.
A high-profile multi-millionaire movie star like Wesley Snipes, so abundantly blessed by America, trying to defraud America of its fair share?
While the rest of us poor slobs put off buying a new fridge until next year so we can pay ours?
Snipes could get what amounts to life in a federal lockup and the IRS could legally confiscate his bank account, assets and assorted properties.
The legal system could have done what it was designed to do. Send a message to scofflaws that the law applies to everyone equally.
I mean, if ever there were an open and shut case of tax fraud, Wesley Snipes is it.
But the IRS is contenting itself with collecting back taxes — in installments! — and letting bygones be bygones.
A lot of the bloggers and some editorial commentaries are protesting the special treatment being afforded the action star. They are complaining that there is one law for ordinary people and another law for the rich and famous.
I think there is more to it than that.
Snipes’ defense is that there is no law for collecting income taxes at all. That is an even greater threat to the law than letting people get away with breaking it. The purpose of a trial is to determine whether or not a law was broken.
A necessary element of that burden is examining the legitimacy of the law in question. The IRS is often seen as the great equalizer.
When the feds couldn’t nail Al Capone for bootlegging, racketeering and murder, they went after him for tax evasion.
But Wesley Snipes defended his refusal to pay taxes on his contention the IRS didn’t have the authority to collect them. To prosecute Snipes means putting the IRS itself on trial.
Most tax court cases take place under the radar. Trying somebody like Wesley Snipes would put the trial, and the tax code, under a public microscope.
The reason is because the IRS is reluctant to prosecute tax protesters. A couple of years back, a tax protester group staged a hunger strike in front of the IRS, demanding a public debate over the legality of the federal income tax laws.
On April 15, they ringed the IRS building in DC with 1044 tax protesters, repeating their demands for a public debate on federal income tax laws and the legality of the 16th Amendment.
According to the tax protester movement, the federal income tax is unconstitutional because direct taxation is prohibited. The 10th Amendment protects a fundamental right to work and a fundamental right is not subject to federal tax.
The 16th Amendment giving the government the right to impose income taxes was never properly ratified. It doesn’t by its wording, give the Congress new power to impose taxes. It fails to define what constitutes ‘income’ subject to taxation. The list goes on.
So why doesn’t the IRS put all the controversy to rest? Why wouldn’t the IRS agree to an open debate over the tax codes. Why didn’t they arrest and try all those protesters?
“We The People” founder Bob Schulz filed a lawsuit against the IRS in which the court found the IRS ‘routinely’ violated due process and nullified much of the IRS power to compel compliance with IRS administrative demands for personal and private property.
In 2002, Schulz publicly declared his intent to stop paying income taxes and filing income tax returns. Schulz didn’t just say it in public, he sent a registered letter to the IRS Commissioner to that effect.
Indeed, Schulz has turned it into a business. If you want to read his letter to the IRS, you can buy it at his website for $39.95 (tax-free).
Despite his high-profile war against the IRS, Bob Schulz still doesn’t pay income taxes and the IRS looks the other way.
These are good questions — for which the IRS has yet to offer any definitive answers.
Raising yet one more question: Why is that?