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April 23, 2008

Why the government is eager to imprison Wesley Snipes

Forbes.com has this new piece, headlined Wesley Snipes And The TaxDef War," which spotlights why the government sees the Snipes case as one of the most important tax evasion cases in recent memory:

When Wesley Trent Snipes is sentenced Thursday in an Ocala, Fla., courtroom for willfully failing to file federal income tax returns, more than the 45-year-old star's freedom will be on the line. Also at risk will be the government's efforts to staunch the spread of what it recently re-branded "tax defiers."

Tax defiers — or "tax protesters" as they've traditionally been known — glom onto one kooky, discredited theory or another as to why the income tax is illegal or doesn't apply to them personally or doesn't cover their normal sources of income. (Example: Only foreign income, or only earnings of federal employees are taxable.) They typically file returns showing zero income or simply stop filing. Sometimes, they also put in claims for refunds of taxes they paid before their conversions, as Snipes did.

Just this month Nathan J. Hochman, the assistant attorney general in charge of the U.S. Department of Justice Tax Division, launched a new national initiative (TAXDEF for short) to bolster and better coordinate criminal and civil actions against tax defiers. Why now?  Hochman said in an interview he's worried that defiers are now spreading their ideas "virally" through the Web.

"They're not just based in some small cities and having meetings in motel conference rooms with a relatively small number of participants," he said. "They can promote their product across the United States literally overnight in a way that was physically impossible to do back in the mid 1990s." Criminal convictions are particularly important, Hochman observed, because word of them "spreads virally" too. "To lose one of these cases has significance as much as winning it does," he added.

While the government didn't exactly lose the Snipes case, it wasn't a pure win either.  On Feb. 1, a jury acquitted him of two felony charges related to false refund claims and three of six misdemeanor failure-to-file charges, finding him guilty of not filing his 1999, 2000 and 2001 returns. (Two Snipes co-defendants who sold him the tax protest ideas were convicted on felony charges.  At the trial, Snipes' lawyers argued he was a victim who took and believed the bad advice of others.)

Federal prosecutors now say Snipes should get the maximum three-year prison term allowed for his convictions, not only because of the amount of money involved — $14 million in gross unreported income in 1999, 2000 and 2001 alone — but also because of the problematic publicity generated by the split decision in his case.

Daniel R. Meachum, a Georgia attorney representing Snipes, told Forbes he'll argue that Snipes "does not need to be incarcerated. He is not some criminal that poses a threat to society." Meachum added that Snipes has made arrangements to pay the amount of back taxes his forensic accountants believe is owed. He declined to say how much that is, but acknowledged that it is not a number that has been agreed to by the government.

In their sentencing memo, prosecutors contend that the decision "has been portrayed in the mainstream media as a 'victory' for Snipes," and urge the judge to "send a message that Snipes did not 'beat the rap.' " To back up their claim, the prosecutors cite a New York Post headline: "Snipes is Now Tax-Free, Beats Heavy Rap and Walks With Wrist $lap." Even worse, the prosecutors assert, "Snipes' fellow tax defiers have been emboldened by his alleged 'victory' in this case." The defiers, the government says, consider the split decision "as a vindication of anti-tax theories and a 'win' that will attract additional converts into their movement."

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Comments

There is just somthing evil about taxing someone's hard earned income. The federal government has too much money and too much power and I think it's approaching a very dangerous level.

Posted by: Paul | Apr 23, 2008 11:48:01 AM

Unless Blade and Demolition Man are total works of fiction, I doubt any prison could hold Mr. Snipes, anyway. This entire debate is academic.

Paul, the government provides services. One of those services is printing stable currency that allows you to spend your hard-earned money on things instead of bartering. Another thing it does is provide law enforcement and courts so that your employer pays you on time, the bank keeps your money safe, and your stronger neighbors don't rob you. It's fine to say that the government overreaches, that the tax policies are unfair, or that the government wastes much of the money it takes in taxes, but to say that there's "just som[e]thing evil about" the notion of taxes requires some justification, I think.

Posted by: | Apr 23, 2008 12:42:58 PM

It is a bit much for me that the Gov't is arguing that how the verdict is being portrayed in the media should be considered in sentencing.

Posted by: KRG | Apr 23, 2008 1:38:46 PM

When the federal govenment places a 30% or more tax on someone's income I don't think that it's without jusitfication or even unreasonable to claim it's evil. The government could easily get by with a whole lot less than 30% if they wouldn't waste 95% of the taxas on needles crap. The federal government is like a theif with a credit card. What the hell do care what they spend it on. Heck it's someone elses money.

Posted by: Paul | Apr 23, 2008 2:06:26 PM

One of those services is printing stable currency...

BA-HAHAHAHAHA

This IS funny. The dollar is not worth a dirty diaper, people are hoarding foodstuffs and Sam's Club is limiting purchases of rice.

Is the sky blue in your world, or some pretty pink polka-dotted kind of thing. Thanks Republicans, or any other myopic moron who voted for him (TWICE!). Look around and see the prison state and economic wasteland you've created here and across the globe. You'll never admit how wrong you are, I understand that. It'd make your head explode.

But but but but but Clinton...

Proud of my country.
Appalled by my government.

Posted by: babalu | Apr 23, 2008 2:44:55 PM

The only thing I can agree with here is that it probably isn’t proper for the government to make a sentencing argument based on how a lower sentence would be (mis)porrtrayed in the media. This essentially means judge-sentencing, rather than jury-findings MUST be based on the public’s perception and MUST be influenced by the media. Essentially this is the opposite of what a jury does. Is the government really arguing for this much of a difference?

Of course there is room to disagree with whether the government is doing the right thing or not, but let’s not act as if the government does nothing.

The government DOES protect us from wild animals.
The government DOES provide the US with a functioning economy where contracts are enforceable.
The government DOES provide police forces and military forces.
The government DOES finance the development of the sciences.
The government DOES provide a court system that enforces contracts and resolves tort claims.

Now, it might not do all these things well, and it might not do them the way you want, but it DOES do them.

Paul, 30% really isn’t that much as compared to other countries. I hardly think it is “evil” to tax people, so long as the tax laws are applied equally.

Folks, there is real evil out there in the world, but it isn’t found in the tax code. (And being a tax lawyer, I have looked.)

Posted by: S.cotus | Apr 23, 2008 3:38:53 PM

I get angry when I hear people say that our tax rate is not like another country. Who cares about the other country? In this country period, the tax rate is outrageous. Our tax dollars are being wasted and personally, I think people should stop paying taxes until the government get a grip on the wastes. Yes, I am one of those unfortunates who pay their taxes.

Posted by: | Apr 23, 2008 4:52:54 PM

>>I get angry when I hear people say that our tax rate is not like another country.

Interesting. I get angry when it rains.

>>Who cares about the other country?

I do. When comparing my standard of living, individual freedom, tax burden, etc., I look to “peer” countries.

>In this country period, the tax rate is outrageous.

You just think it is high. To say something is “outrageous” you would need to compare it to something. For example, I recently considered buying a car for $25,000. Is that “outrageous”? It all depends.

>Our tax dollars are being wasted

“Waste” is a matter of perspective. Sure, there are things that I would not spend government money on, but that is what we have Congress (and presidential elections) to supervise.

>and personally, I think people should stop paying taxes until the government get a grip on the wastes.

Well, that would be a crime. Moreover, if you were my neighbor I would turn you in (but you don’t actually do that). Why? In a few months we will have a new administration that will see things differently. No matter who wins there will be changes, and no matter who wins some people will be angry at what they do. Yet, as a country we don’t vote with our checkbooks for government expenditure – if we did, those discontents would, say, refuse to pay taxes that go towards, say, schools, healthcare, or roads.


(By the way, I think as a theoretical matter, it might be interesting to see what happens if we let people decide on their tax return were they want a moderately-sized portion of their money going.)


Posted by: S. COTUS | Apr 23, 2008 5:39:30 PM

"has been portrayed in the mainstream media as a 'victory' for Snipes," and urge the judge to "send a message that Snipes did not 'beat the rap.' "

So this is how its going to be. The media betray it as a victory for Snipes, so the judge should punish snipes worse for it?

Its bad enough media influences politics now the media is influencing a particular sentencing.

Posted by: Mark | Apr 23, 2008 6:01:25 PM

S.COTUS, that's where you and I are different. I do not get angry when it rain. I also don't used other places or things trying to justify what's wrong to avoid addressing the realities. It seemed that you like to diminish a person reasoning by comparing rather then acknowledging what is here in the now.
Most people I know agreed that we are being taxed to death and they couldn't care less about the taxation going on in other countries. I do find it humorous that you think wasted money is a matter of perspective. I also believe you could be one of those neighbor who would turn people in. Now, why doesn't that surprise me? But I do agree with you on one thing, the new administration will not do anything to upset the tax code. After all, who is going to pay for the damages done by the previous administration.

Posted by: | Apr 23, 2008 7:51:15 PM

Ah, so the tax burden is "outrageous" not because it is high compared to other countries but because you say so.

Posted by: S.cotus | Apr 24, 2008 8:21:08 AM

Yes, it is outrageous according to me and a number of others. I do not have to compare this finding to other countries. All I have to do is look at the wastes. An accountant will tell you that fiscal accountabilty would reduced our tax liability. It doesn't take a rocket scientist to figure out the math.

Posted by: | Apr 24, 2008 12:46:13 PM

Ah, so you just make it up you go along.

No wonder why we have no respect for lay people.

Posted by: S.cotus | Apr 24, 2008 1:21:18 PM

babalu, if you're willing to trade me a dollar for every dirty diaper I can collect, let me know where I can meet you to make the exchange. I'd offer to mail them to you, but I think the postage would make the whole transaction worthless for both of us.

S.cotus, thanks for clarifying that we're dealing with catharsis and not an actual argument.

Others who are still on topic, I agree that the notion of punishing Snipes more harshly because of misrepresentations in the media makes little sense. I suppose that defendants probably argue the opposite ("the media has trashed my reputation, and my sentence should be discounted to account for that additional suffering"), that prosecutors fight it ("that's the risk you take when you commit a crime"), and that judges are generally unsympathetic.

In this case, the government failed to meet its burden of proof on all of the charges that it brought against Snipes. The media accurately reported that, and the public can interpret that however it wants. If any "message" needs to be sent to the public, it should be through an appopriate sentence based on what Snipes was actually convicted of. If it's obvious that the court decided to make an example out of Snipes, then the "message" will be that Snipes's sentence is an outlier, and that tax protestors can still hope for a slap on the wrist.

Posted by: Apr. 23, 12:42 | Apr 24, 2008 1:30:57 PM

"To say something is “outrageous” you would need to compare it to something"

I compare it the percentage it was when they first enacted the federal income tax during world war two when they had a real reason for taxing income. I think it was about 2% or something close which is a hell of long way from 30%. Jesus Christ how did it get that high from a few percent? Anyway I do pay my taxes and I will admit that we need some income tax but not 30%.

Posted by: Paul | Apr 24, 2008 2:07:58 PM

Paul, first google hit when one searches for "first federal income tax":

http://www.infoplease.com/ipa/A0005921.html

Third hit, from perhaps a more reliable source:

http://www.loc.gov/rr/business/hottopic/irs_history.html


More here:

http://www.treas.gov/education/fact-sheets/taxes/ustax.shtml


And that took me about 90 seconds. Take a minute or 2 to look around before talking out of your rear end.

Posted by: | Apr 24, 2008 3:09:45 PM

Apr. 23, 12:42, Just to be clear, I am in complete agreement with you regarding whether media coverage should play a part in sentencing. I didn't pay too much attention to the sentencing proceedings, so I don't really know how the 3 years was calculated, or whether the judge even cared about the media.

Posted by: S.cotus | Apr 25, 2008 10:52:43 AM

The truth is this: while I do not agree with Mr. Snipes decision, I also disagree with the IRS. We live in a country that was more prosperous before we had any type of tax. Now we are facing economical disaster but somehow as a nation we managed to spend 100,000,000 for our new presidents inaguration. I think our whole country has lost the concept of money.So it really does not matter to our country unless the money proceeds are being horded by the tax payers anyway's.

Posted by: Mike Seabolt | Feb 6, 2009 6:38:09 PM

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