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Many Issues -- Many Distractions
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One Problem -- One Solution
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In 2008, Wesley Snipes was accused of and tried for several income tax related violations. Specifically, he
was charged with
- One count Income Tax Fraud
- One count of Conspiracy to Defraud the fed govt
- Six counts of Willful Failure to File
Snipes was found innocent of the two serious charges, fraud and conspiracy. He was also found innocent of
three of the failure to file charges. But he was convicted on three failure to file counts.
Regardless of what you heard in the media, Snipes won his case. Allow me to explain the issues and the results.
First, there was no evidence of the criminal charges being true. One must be guilty of intending to defraud
while knowing it is fraud in order to be convicted of these two charges. Snipes, through his lawyers,
presented more than adequate evidence that showed Snipes was acting on evidence he believed was true and
accurate. If he believed the evidence to be true, he was not guilty of "an intentional violation of a known
legal duty."
Second, he was found innocent of three charges of failing to file tax returns. These were three years where
he never filed a return AT ALL because of his belief that he was not required to file or to pay. The jury
agreed with him that there was no law broken for these three years, and it dismissed those charges.
The three guilty counts of failure to file resulted from:
- One year return filed with false numbers resulting in request for refund
- One year return filed but with an "illegally" modified Form 1040
- One year return filed with falsified numbers relative to salary received
Please look at this carefully.
One year, Snipes followed some advice to file a return showing no taxable income and requested a refund for
all taxes withheld. The IRS claimed that Snipes made too much money to not have any taxable income, and
convinced the jury this was true. Because of the process used to file that return, the IRS claimed it was
not really a return at all, resulting in the failure to file charge.
One year, Snipes followed some advice to modify the Form 1040 in order to allow him to claim something
not allowed by a standard Form 1040. According to IRS procedures, modifying a Form 1040 results in it not
being a Form 1040 at all. This resulted in the IRS claiming Snipes filed no legitimate return for that year
while knowing he was required to file. After all, the argument is used, one simply does not file a return
at all if one is not required to file a return.
And one year, Snipes filed a return that showed he had no taxable income. Again, the IRS claimed that
Snipes made too much money to not have any taxable income, and convinced the jury this was true.
Truthfully, Wesley Snipes was probably legally correct in what he did for those three years. If so, his
lawyers did not convince the jury of that. On the other hand, Snipes did not file a return at all for
three years, and his lawyers were able to convince the jury that not filing was no violation of law.
In other words, it is safer to not file at all than it is to file a return and try to prove USING THAT RETURN
that you are not required to file or not liable for a tax.
The moral of this story, ladies and gentlemen, is quite simple. Make sure you have studied the legal issues
well enough to demonstrate that you truly believe your claims about the income tax. And then, do not file
returns where you use the returns to claim your arguments - just don't file any returns at all.
This does not mean that you will avoid having the IRS come after you for not filing. Nor does
it mean that you will win against the IRS if it does come after you. But it does mean that if you truly
believe the Internal Revenue Code does not require you to file a return or pay income taxes, you can probably
convince a jury that you are not REQUIRED to file returns or pay income taxes. And it DOES mean that you
need to be able to prove you believe these things you claim to believe and that you need to live by your beliefs.
Don't hedge your bets by claiming you are not required to file a Form 1040 and then file a Form 1040. It is
better to not file at all than to file a return with false or misleading numbers on it.
[The above article is not intended as legal counsel. It is merely an analysis of one specific court case, its issues, and its outcome.]
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