Tax Help: Is It Ever Too Late? The Case Against Wesley Snipes

If nothing dramatic takes place in the case of the famous actor Wesley Snipes, he will probably be headed to jail. The tax problem of Snipes is not unfiled tax returns. Snipes did not file three years of tax returns.  The estimated tax that he owed was close to $3 million.  Although the amount of back taxes that Snipes owed is rather large, we contend that his tax problem may have had a better outcome if his CPA or tax attorney interfered early on to save him from himself.

We have clients who come to us with as many as 10 years of unfiled returns. Yet, the IRS (which is not always guaranteed) does not press criminal charges against them. Granted, it is harder to reach an IRS tax settlement if you have not filed, but still, it is done everyday.

What then made Snipes IRS tax problem different?  First off, the IRS uses celebrities to publicize its massive powers to go after people who owe back taxes to the IRS. Snipes is a big boy with a large tax debt. That leads us to the next point which is the size of his tax debt. Although alone may have not caused the IRS to press criminal charges, it is still a rather a large tax debt that generates its own dynamics.

The most important factor that contributed to the exacerbation of that IRS problem, however was not the size of the tax debt, or the fact that he was a celebrity. Willy Nelson was as big a celebrity as Snipes and his tax debt was larger, possibly several times the tax debt owed by Snipes. 

The crucial tax blunder that Snipes committed was his challenge of the IRS on the legality of taxation. He became a tax protestor.  As such he was exposed to the full wrath of the IRS and was hit with all the collection arsons the IRS has culminating in his criminal indictment and then into sentencing him to three years in prison.

Snipes could just as easily have paid his tax with one check or even negotiated an Installment agreement (most likely he would not have qualified for an Offer in Compromise; certainly not the Currently Not Collectible status.)  In my opinion what he did was foolish and misguided but on the other hand he is unwarrantedly harshly dealt with. I understand that he offered to pay his tax debt. Three years in prison for some one who wants to pay for his mistake?  

Lesson learned is that never take on a battle you cannot win.  Tax protestors in our experience always lose. Don’t compound your tax problem. Instead seek tax relief and file all your unfiled tax returns. Your CPA or tax attorney may come in handy if you engage them early on.