The tax world had its eyes on Wesley Snipes last week, who was on trial for tax evasion. I hate cases like this. Snipes didn’t report income of tens of millions of dollars and didn’t pay taxes on it. The rest of us pay our taxes, and most of us aren’t as well-to-do as Snipes. But we do it because it’s the law and it’s the right thing to do (no matter how much we hate it).
Yet Snipes gets mostly off the hook last week. He’s all kinds of happy because he was acquitted of felony charges of tax fraud and conspiracy. But he was convicted of three misdemeanor charges of failing to file tax returns. OOOOOH.
His attorney said Snipes didn’t commit fraud.. that he “had no bad intent.” Really? Well what do you call it when you fail to report $38 million in income? From 1999 through 2004, he didn’t file taxes and was involved with a group (American Rights Litigators) known for selling people tax advice that amounted to fraudulent schemes to avoid paying taxes.
I hate that many of the headlines proclaimed that Snipes was acquitted. Certainly any deterrent effect that the IRS hopes comes out of criminal tax cases is undermined with such headlines. He was found not guilty of certain charges, but he was guilty of others and the headlines ought to reflect that. We have a tax system based largely on voluntary compliance… we volunteer our information to the government and tell them how much we owe in taxes. The government counts on us to report honestly, and part of the way they encourage honest reporting is by scaring taxpayers with examples of punishment for those who don’t comply.
The silver lining here? The IRS can still go after him civilly to collect the tax on the $38 million of income. (His lawyer is hinting that he’ll cooperate.) This verdict in the criminal trial doesn’t mean he doesn’t owe taxes. It just means he has a lower punishment coming.
And Snipes will probably get some prison time. I actually hope that he does. He is eligible for up to 3 years in prison, though I suspect he won’t get that much. But he should get some time… to send a message to others that shirking your tax obligations is not okay.