July 19, 2010 12:00 am

Actor’s Conviction for Tax Evasion Upheld

It looks like Wesley Snipes is going to jail. An appellate court has upheld his conviction on tax evasion and his sentence of 36 months in prison.

The case involved three years in which the actor failed to file a tax return after he became associated with the American Rights Litigators, an organization that counseled its customers to resist the IRS. The organization’s resistance was based on the argument that the domestic earnings of individual Americans do not qualify as “income” because the earnings do not come from a listed “source” in the Internal Revenue Code. Even though Snipes earned $37 million in 1999 through 2004, he did not file tax returns for any of those years. As the appellate court reported, he claimed to be a “fiduciary of God” and a “foreign diplomat” who was not obliged to pay taxes.

He was charged with conspiracy to defraud the federal government and other tax-related crimes. While he was not convicted on the conspiracy charge, he was convicted on three counts (for three years) of willfully failing to file a tax return. A probation office’s presentence investigation report recommended a certain sentence; the district court judge followed the recommendation.

An appellate court has upheld the conviction and sentencing. Snipes maintained that when the IRS agent read him his rights, including the right to remain silent, this meant he did not have to file a tax return; filing a return, in his view, amounted to a violation of his Fifth Amendment right against self-incrimination. However, the court pointed out that his obligation to file his 1999, 2000, and 2001 returns existed before he was read his rights in 2002. The court also decided that the sentence, based on sentencing guidelines, was not unreasonable and was upheld.

Source: United States v. Wesley Trent Snipes; No. 08-12402, CA-11


Tax Glossary

Accrual method of accounting

A business method of accounting requiring income to be reported when earned and expenses to be deducted when incurred. However, deductions generally may not be claimed until economic performance has occurred.

More terms