Snipes' tax evasion trial begins

Actor Wesley Snipes and his attorneys face the media after his arraignment at the Federal Courthouse in Ocala, FL in this December 7, 2006, file photo.

Published: Monday, January 14, 2008 at 6:01 a.m.
Last Modified: Monday, January 14, 2008 at 12:00 a.m.

From 1999 to 2004, the actor Wesley Snipes earned $38 million appearing in more than half a dozen movies, including two sequels to his popular vampire thriller "Blade.''

The taxes he paid in the same period? Zero.

But unlike other celebrities who find themselves on the wrong side of the Internal Revenue Service, Snipes has a flamboyant explanation: He argues that he is not actually required to pay taxes.

Snipes, who is scheduled to go on trial today in Ocala, has become an unlikely public face for the anti-tax movement, whose members maintain that Americans are not obligated to pay income taxes and that the government extracts taxes from its citizens illegally.

His trial has become the most prominent income tax prosecution since the 1989 conviction of the billionaire New York hotelier, Leona Helmsley, who went to prison for improperly billing personal expenses to her business.

Tax deniers maintain that the law only appears to require payment of taxes. All their theories have been rejected by the courts, including the one invoked by Snipes, which is known as the 861 position, after a section of the federal tax code.

Adherents say a regulation applying the 861 provision does not list wages as taxable, though it does say that "compensation for services'' is taxable. The courts have uniformly rejected all such theories, and eight people have been sentenced to prison after not paying taxes based on the 861 argument.

Despite the court rulings, juries have auitted some prominent tax resisters in recent years, and failed prosecutions have encouraged others to join. Even when the government has failed to obtain convictions, it succeeded in collecting the taxes through civil enforcement.

J.J. MacNab, a Maryland insurance analyst who tracks people who deny they owe taxes and has testified before Congress about the movement, said that an auittal of Snipes would be a severe setback for the IRS.

"He will get more press and attention than any other victory by the tax deniers, and the growth in new members will be exponential,'' she said.

Snipes, 45, is charged with two felonies: conspiracy to defraud the government and filing a false claim for a $7 million refund (a claim for the year 1997, before he stopped paying taxes). He is also charged with failing to file tax returns for the six years starting in 1999.

Prosecutors say they intend to show that Snipes moved tens of millions of untaxed dollars offshore and gave the government three worthless checks totaling $14 million to cover some taxes.

In court papers and interviews, Snipes says that he is not guilty and that he acted on the advice of two tax professionals. They are being tried alongside him and are promoters of the 861 position and other tax theories.

One is Douglas Rosile, who was stripped of his accounting license in 1997. The other is Eddie Kahn, who has served prison time for tax crimes. Both are under federal court order to stop promoting tax evasion, including the 861 position.

The lawyer representing Snipes at trial is Robert Bernhoft of Milwaukee, who has been barred by court order since 1999 from selling a program under which he said people could legally stop paying income taxes.

Snipes, who grew up in the Bronx, is best known for tough-guy roles in movies like "Blade," and "The Passenger," but he also starred in films by Spike Lee ("Jungle Fever," "Mo' Better Blues") and Ron Shelton ("White Men Can't Jump").

His involvement with the tax resistance movement may stem from his association with the Nuwaubians, a quasi-religious sect of black Americans who promote anti-government theories and who set up a headquarters in Georgia in the early 1990s.

In 2000, Snipes sought a federal permit for a military training compound on land next to the Nuwaubian camp; the Bureau of Alcohol, Tobacco and Firearms rejected the request.

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