Taxable Talk

Well, Edwin Kanguatjivi told Reuters that Mr. Snipes is filming a movie in Namibia. "It is confirmed. He is definitely here." The United States does not have an extradition treaty with Namibia.

Meanwhile, a South African report states that Snipes is filming the movie Gallowwalker, and that its' producers have asked to delay Snipes' return to the United States until December, when filming has completed.

Snipes has been in trouble in the past: reckless driving on a motorcycle, a phony South African passport, and carrying a concealed weapon. Snipes faces up to sixteen years in prison if convicted on all of the tax charges.

Joe Kristan of Roth Tax Updates has a great summary of the Snipes charges. And the Los Angeles Times has a good background article, too.

Actor Wesley Snipes was indicted today on eight counts of tax fraud. Snipes is accused of not filing tax returns for the last six years and of filing false refund claims totaling $12 million.

Over the last six years Snipes appeared in at least eight films, including The Art of War, Blade 2, and Blade: Trinity. He also produced Blade 2 and Blade: Trinity.

The Associated Press report notes that Snipes used American Rights Litigators (ARL). ARL was sued by the Department of Justice in 2003. Among the charges in the indictment is that ARL takes 20% of the refund and that ARL has a history of filing false returns.

The indictment's main point is that Snipes and his preparers prepared returns that included only foreign income. If you're a regular reader of this blog, you know that the U.S. taxes the worldwide income of its citizens (and permanent residents).

Thanks to The Smoking Gun, we can see Snipes' 1997 Amended Return (Form 1040X). On page 1, we can see that Snipes' return has been amended to remove $19,238,192 of income, generating a refund of $7,360,755. The reason is shown on page 3: The income previously reported is "not from taxable sources per [IRS Regulation]1.861-8(f)(1)." The three pages that follow attempt to justify this position.

Did you notice the title of the form on page 3? It's Form 8275-R, used, "To disclose items or positions taken that are contrary to Treasury regulations." Not only is this position contrary to regulations, it's contrary to the Tax Code, which is law: Section 61(a) states that income is all income from whatever sources: "Thus, citizens of the United States generally also are taxed on income earned outside the geographical boundaries of the United States unless they prove that the income is specifically exempted. E.g., sec. 61(a); Cook v. Tait, 265 U.S. 47, 54, 56 (1924)." [From Specking, et. al., v. Commissioner, 117 T.C. No. 9]

Meanwhile, Snipes is nowhere to be found. Soon, though, he may be joining Richard Hatch in the Bozo Taxpayers Hall of Fame, and serve 16 years in ClubFed.

1. Inflate other businesses' deductions by classifying wages and income as loan repayments.
2. Not filing your own tax return.

And if you do both, and get caught, you're likely going to be joining Brian Cox at ClubFed. Mr. Cox is a former Detroit-area accountant who did both of the above. He was found guilty earlier this year of 42 counts of filing false claims and 11 counts of preparing false tax documents. He'll be spending 33 months at ClubFed and will have to make restitution of $104,000.

News Stories: Detroit News, Detroit Free Press

Back in 2000, the IRS raided "Renaissance, The Tax People." The company was a multi-level marketing firm specializing in tax. Nothing wrong so far. However, the Department of Justice alleged in 2004 that the company told clients to add non-existant exemptions to their W-4 forms, decreasing the tax the clients had to pay. And it would be just enough money to buy the Renaissance tax package! Additionally, they were accused of having a pyramid scheme.

Michael Cooper, the former head of Renaissance, fled the United States in 2003, but was caught re-entering the U.S. near Laredo, Texas. Mr. Cooper will be tried next year.

Daniel Gleason, the former tax director for Renaissance, pleaded guilty today to defrauding the IRS. He'll face up to five years in prison when sentenced.

My usual advice still applies: when it sounds too good to be true, it probably is.

WIBW News Story

Samuel Currin, the former chairman of the North Carolina Republican party, has agreed to plead guilty to conspiracy charges related to tax fraud, according to a published report.

Mr. Currin will, according to the report, admit to taking $1.45 million and laundering it through client trust accounts and an offshore debit account. In violation of federal law, Mr. Currin didn't report the offshore account. Another published report states that Mr. Currin used an offshore trust scheme to avoid taxes on $10 million used for Internet gambling rights.

Mr. Currin faces up to 43 years in prison.