Taxable Talk

Remember Richard Hatch, the Survivor winner who decided not to report his $1 million in winnings? Mr. Hatch, who is now residing at ClubFed, went to his accountant and was told he had to pay taxes on his winnings. He asked his accountant what would happen if he didn’t include his $1 million prize, and was told he’d get a small refund. He asked his accountant to prepare that return; the accountant did, but stamped “Do Not File” on the return. Mr. Hatch filed the return and the rest is history.

Mr. Snipes appears to have engaged in similar behavior. He called his tax accountant, Kenneth Starr of Starr and Company, and told Mr. Starr that he didn’t have to pay taxes. “I said that was ridiculous; that everyone has that obligation. He said he had spoken to some people that said he didn’t have to,” Mr. Starr told the Ocala, Florida court yesterday.

Mr. Snipes had the not-so-perfect rejoinder, according to Mr. Starr. “He said, ‘You always think you’re right and you always think you know everything. You’re not right about this.'” Mr. Starr then sent a letter to Mr. Snipes terminating their accounting relationship.

Under cross-examination Mr. Starr was asked whether he had sent a written notice to Mr. Snipes that he had to pay taxes. The AP report notes, “Starr said he didn’t have to; he told Snipes on the phone and needed nothing further to terminate their tax arrangement.”

Joe Kristan has more at Roth Tax Updates.

Opening arguments were heard in Ocala, Florida in the trial of Wesley Snipes. Prosecutors called Snipes a tax evader, and that he didn’t pay $35 million in taxes from 1999-2004 according to this Fox News story. Prosecutor Robert O’Neill told the jury, “The defendants Snipes, Kahn and Rosile willfully agreed to defraud the United States of revenue it was due.”

But that’s not how the defense views it. Robert Bernhoft, one of Snipes’ attorneys, said that Snipes was willing to pay his back taxes once he heard from the IRS. Another of Snipes’ attorneys, Daniel Meachum, said that Snipes had been duped by bad financial advisers.

Ah yes, Mr. Meachum. He’s the attorney that Snipes axed for “poor representation” last year. As Joe Kristan noted, he reappeared on Tuesday:

“So who shows up at his lawyer’s table yesterday but Daniel Meachum? From the A.P. report:

“‘…Snipes now has two choices: keep Meachum off the case or waive his previous claims of ineffective counsel. Waiving the claim might prove to be a problem if Snipes were convicted, since that could provide fertile ground for a possible appeal.’

“…It makes it look as though the prior ‘firing’ may have been just a cynical delaying tactic.”

I guess the defense chose waiving the claim, as Mr. Meachum was present today. In any case, tomorrow brings the first evidence and testimony in the case. Who knows, maybe Mr. Meachum will be asked to disappear again?

Day 1 of the Wesley Snipes trial has come and gone in Ocala, Florida. Jury selection began but did not conclude today.

The day began for Mr. Snipes in a prayer service. At an Ocala church Mr. Snipes was joined by 22 pastors and 150 friends before the trial began at 9:30 a.m. local time. Mr. Snipes is accused of making a false income tax return and not filing his tax returns for several years.

Then jury selection began. Judge William Terrell Hodges first read off a list of prosecution witnesses: accountants, investigators, and the like. Jurors are always asked if they know a witness (the goal is an unbiased jury). Then the attorneys for Mr. Snipes read off their witness list. Tax experts, they weren’t: movie director Spike Lee, actor Woody Harrelson, actress Goldie Hawn, newscasters Tom Brokaw, Barbara Walters, and Diane Sawyer, and former boxer Muhammad Ali.

Though jury selection was supposed to finish on Monday it hadn’t when court adjourned for the day. Jury selection will likely conclude on Tuesday; opening arguments will also likely be heard then.

Finally, thesmokinggun has a contribution today. They present a convenient chart showing his income and at what level you have to pay taxes. The second through fourth pages show some sort of legal document Mr. Snipes filed in Orange County, Florida (Orlando). I can’t figure it out, and neither could thesmokinggun.

The defense estimates that the trial will last about a month. It should be interesting….

News Stories: AP, Orlando Sentinel

Wesley Snipes goes on trial today, facing charges of tax evasion, failing to file tax returns, and filing a false claim for an income tax refund. The TaxProf Blog has a post with links to the various media coverage of the trial; Joe Kristan also has a report on Snipes’ use of the 861 defense (and its likely failure).

As there are developments I’ll continue to post on United States v. Snipes.