Taxable Talk

Wesley Snipes attorneys appealed Judge William Hodge’s rulings that the trial will take place in Ocala, Florida and that it would start on January 14th. The appeal was filed at the 11th Circuit Court of Appeals in Atlanta, according to Ocala.com. Robert Barnes, Snipes’ attorney, also asked the Appeals Court to postpone the start of the trial until after the Appeals Court rules on their motions.

If the Appeals Court doesn’t issue a stay in the proceedings it would start on schedule in just over a week, and would likely make Snipes’ motions moot. We should know the results of these rulings in the next few days.

Wesley Snipes will be tried in Ocala, Florida, not New York City. That was just one of the rulings made yesterday by Judge William Hodges. The judge found that a jury in Florida would likely consist of the same racial percentages as one would find in Central Florida, and that’s the important constitutional question, not the racial percentage differences between Florida and New York. Additionally, the judge ruled that the trial will not be delayed until April.

So Snipes’ trial is set to begin on January 14th in Ocala. We’ll see how big of a media circus the trial is in just a few weeks. In any case, Snipes’ trial will probably be just the tonic for tax preparers while we prepare 2007 returns.

Wesley Snipes’ defense attorneys will ask next Tuesday to delay Mr. Snipes’ trial until April. The trial is currently scheduled to begin in January in Ocala, Florida. The defense attorneys, according to Ocala.com, received 1.6 million pages of material from their discovery motions and need additional time to go over the material.

This request seems a lot more reasonable than their request to move the trial to New York City because a fair jury is impossible to come by in central Florida.

The Department of Justice filed a motion this past week in Ocala, Florida accusing Wesley Snipes of using overseas bank accounts in Switzerland, the Isle of Man, and Antigua to hide his funds. They’ve also accused Snipes of “selling” a business when he maintained full control and of sending frivolous correspondence to the IRS.

While the DOJ isn’t charging Snipes with some of these acts, they want to introduce evidence of these acts in Snipes’ upcoming trial on filing for a false income tax refund. Snipes has also been charged with conspiracy. The DOJ believes that evidence of these acts will help to persuade a jury of Snipes’ illegal conduct.

Last week Snipes asked that his trial be moved from Ocala as the area is too “racist.” Snipes may have a lot more to fear from the evidence. The trial is currently scheduled to begin in January.

The Hollywood Reporter is saying that Wesley Snipes’ tax evasion trial has been continued. Apparently Judge Terrell Hodges changes his mind after speaking with Mr. Snipes.

It appears that the new trial date has not been set.

More on the TaxProf Blog.

Wesley Snipes fired his attorneys for his upcoming tax evasion trial. The Ocala Star-Banner reports that Snipes new attorney, Robert G. Bernhoft, told Judge Terrell Hodges, “The scope and prejudicial effect of this pervasive ineffective assistance of counsel only recently came to Snipes’ attention, causing an irreparable breach in the attorney-client relationship with his former attorneys, and precipitating their discharge by Snipes, and the hiring of new trial counsel.”

Hogwash, according to Judge Hodges. “This series of events would lead any reasonable person to suspect that the defendant’s dismissal of able counsel is nothing more than a ploy designed to force a continuance of the trial,” Hodges said, as reported by The Smoking Gun. The trial will start, as scheduled, on October 22nd.

Snipes’ former attorney was William Martin. Martin has represented many famous individuals, including Senator Larry Craig, Michael Vick, and Allen Iverson. Interestingly enough, The Smoking Gun notes that Snipes’ new attorney has represented several tax protesters in the past. And there’s more.

A quick search found that Mr. Bernhoft has faced the IRS before as a defendant in a tax protester case. Back in 1996, Mr. Bernhoft and Robert Raymond operated “Morningstar Consultants” in Milwaukee. They ran advertisements saying “Just Say No”: The IRS, according to Bernhoft and Raymond when they operated Morningstar Consultants, has no right to compel you to file a tax return, to require withholding, and a number of other tax protester arguments. The IRS filed suit against them for their “De-Taxing America” program and won at the District Court level; they were permanently enjoined from marketing this program. They appealed, and the District Court ruling was upheld.

The Appeals Court found plenty of problems with the “De-Taxing America” program. “The statements appellants made in the Just Say No advertisement are clearly false representations concerning the government’s authority to tax its citizens…We attribute to both appellants a basic knowledge of the law such that they should reasonably be aware that their personal belief that paying taxes is a voluntary activity does not represent the current state of the law.”

Anyway, Mr. Snipes appears to have found an attorney who believes—unless his views have changed in the past few years—that taxes are voluntary and that Mr. Snipes is right that only foreign income is taxable. These kinds of arguments have a batting average well below the Mendoza line in court. Of course, at this time Mr. Snipes is only alleged to have committed these acts. But tax protester arguments are extremely unlikely to be successful in this kind of case.

Based on this development, I think we’re going to have a lot of humorous moments during Mr. Snipes’ upcoming trial. But I have a feeling that Mr. Snipes won’t be laughing much at the end.

News Reports:

Ocala Star-Banner
The Smoking Gun

Poor Wesley Snipes. As you may remember, Snipes will soon be on trial for allegedly filing a false claim for an income tax refund. As Joe Kristan of Roth Tax Updates reports, Mr. Snipes lost the lead in Spike Lee’s new World War II film. His passport has been seized pending the trial.

If found guilty, Snipes will likely lose a lot more roles as he’d probably be spending some time at ClubFed.

Wesley Snipes lost his latest battle in federal court this past week. He had asked that his trial be moved from Ocala, Florida, to New York City. Snipes is accused of attempting to obtain a fraudulent $12 million tax refund.

The judge, though, was unmoved. Judge William Terrell Hodges wrote, “While the Ocala courthouse is not located in the immediate vicinity of a major airport, it is within one hour and a half driving distance from two international airports, (Tampa and Orlando), and is within a 45-minute driving distance from Gainesville Regional Airport, which has regular direct flights to and from Atlanta and Miami…As the government points out, these driving times are only slightly longer and, on some occasions may even be less, than the congested commute from New York airports to downtown Manhattan.”

Snipes also asked for the move because he has a home in New York. But the judge pointed out that he has a home in Orlando, which is just to the south of Ocala. The judge also noted that Snipes “…is an affluent individual…” who can afford the travel costs.

And while the probable jury pool in central Florida wasn’t listed as an argument in both sides’ briefs, you can bet that Snipes felt that he would likely have a better chance in Manhattan than in Ocala, Florida. So the media circus will descend on bucolic Ocala in October when Wesley Snipes will face the government.

News Story: St. Petersburg Times

Joe Kristan of Roth Tax Updates has an update on the Wesley Snipes case. For those of you who don’t remember, Wesley Snipes is accused of asking for a fraudulent refund of $12 million. Snipes used tax the argument that only foreign income is taxable (hint to anyone who wants to try that: don’t). The IRS wasn’t amused, and Snipes is now a Florida courtroom.

When we last reported on Snipes, he had accused the prosecutors of being “racially motivated.” The judge denied that motion, and stated:

“From a prosecutor’s point of view, especially in tax cases, the primary objective in deciding whom to prosecute is to achieve general deterrence. Here, Defendant Snipes is admittedly a well known movie star, and a person of apparent wealth, whose prosecution has already attracted considerable publicity. By contrast, the Defendant Eddie Ray Kahn does not appear to share Defendant Snipes’ notoriety. “Since the government lacks the means to investigate and prosecute every suspected violation of the tax laws, it makes good sense to prosecute those who will receive, or are likely to receive, the attention of the media.” United States v. Catlett, 584 F. 2d 864, 868 (8th Cir. 1978) (internal citations omitted); see also United States v. Hastings, 126 F.3d 310, 314 (4th Cir 1997) (no selective prosecution in case against prominent businessman and Republican party leader charged with failure to file income tax returns).”

Wesley Snipes was wrong. If you’re famous, and the IRS thinks that you’ve evaded taxes, you are much more likely to be prosecuted. It also helps (if you want to be prosecuted) when you persist with tax protester arguments after the IRS warns you to stop (which Wesley Snipes did).

So Mr. Snipes will soon go on trial. And if he (and his attorney) continue down this path, he will likely find himself at ClubFed.

Hat Tip: Roth Tax Updates