US Court of Tax at Wesley Snipes: Pay the IRS

[ad_1]
<div _ngcontent-c14 = "" innerhtml = "

Do you know the advertisements that promise to pay your tax debts for pennies? While there are ways to reduce your tax obligations, the Internal Revenue Service (IRS) will probably not do so unless you can demonstrate that you meet specific criteria, such as financial hardship. . Actor Wesley Snipes has learned that the hard way this week: the US Tax Court has rejected his offer to reduce his tax debt by millions.

Snipes' tax problems date back to 2006. That year, Snipes was charged with attempting to claim fraudulent repayment of nearly $ 12 million and not filing tax returns for several years. His first attorney, Billy Martin, said in a statement at the time: "We believe that the evidence presented will show that he was the victim of an unscrupulous tax council. And this trial will help justify it.

Snipes pleaded not guilty under all counts and the case was tried in 2008. Despite a long list of potential witnesses (including Muhammad Ali, Spike Lee, and Barbara Walters), and claimed that the defense could take up no more. at one month, the team's Snipes rested after less than an hour. The defense was convinced that the government had not proved its burden by saying, "We could have organized a big show, but we are not doing it. We will not waste the time of the jury. "

The prosecution has, however, submitted evidence that Snipes avoided paying taxes. IRS agent Steward Stich testified that Snipes earned close to $ 40 million between 1999 and 2004 and did not file a tax return or pay any taxes on that income. He also alleged that Snipes had also tried to recover nearly $ 12 million in taxes in previous years 1996 and 1997.

Snipes was acquitted of charges of tax evasion and conspiracy, and was found guilty of failing to file tax returns from 1999 to 2004. He was sentenced to three years in prison and the maximum sentence.

After his conviction, Snipes immediately promised an appeal, which he pronounced (more than once), stating, among other pleadings and exhibits, that his sentence was unreasonable, that his defense was lacking and that 39; he was not able to get a fair trial in Ocala, Florida, which Snipes had previously referred to as "KKK's focus of business". He was supposed to go to jail on June 3, 2008, but this was delayed while waiting for the outcome of the appeal. Eventually, his request for a new trial was dismissed and he went to prison at the McKean Correctional Institution on December 9, 2010.

While serving his sentence, Snipes again appealed his case, this time to the United States Supreme Court. On June 6, 2011, Snipes' petition for certiorari was dismissed, which means the court refused to hear the case.

Snipes was released from prison on April 2, 2013 after serving 845 days of his three-year sentence. He was back to work soon after.

It is important to note that serving a tax sentence does not erase your tax debt. When Snipes was released from prison, he still owed millions to the IRS. Snipes claimed not to have the money and filed a compromise offer (OIC).

A decree allows you to settle your tax obligations for less than the total amount you owe. In general, you submit an OCI because one of the following three things applies:

1. You do not believe that you owe the tax;
2. You can not pay the tax; or
3. There is no doubt that you have to pay the tax or you can pay it, but there are exceptional circumstances.

According to court documents, Snipes would have taken out a cash OIC of $ 842,061, less than 4% of its total underlying liabilities, stating, among other things, that it could not afford to pay debt. The offer was rejected. In response, Snipes appealed the US Tax Court.

Cases in the Tax Court are generally proceeding relatively quickly, at least in relation to other cases in federal courts. However, this one dragged on for years. Snipes filed his petition on November 5, 2015, and the trial was scheduled to take place on December 5, 2016. This hearing date did not occur. In October 2016, US Tax Court Judge Kathleen Kerrigan referred the case to the IRS Appeals Office. These discussions were not productive and on January 18, 2018, a new trial date was set for May 14, 2018. A few motions and some new lawyers later, the case was tried.

On November 1, 2018, Judge Kerrigan upheld the IRS's decision to reject the offer. Justice Kerrigan concluded that Snipes did not "provide authentic documents proving his assets and financial position". She compared her offer to what the IRS felt was her reasonable collection potential and determined that the IRS had not "abused" her discretionary offer.

What difference did it exist? At the time of filing, Snipes owed approximately $ 23.5 million (it should be noted that the 2002 debt of $ 1,497,645 was eventually repaid). Snipes offered to settle for less than $ 850,000. The IRS initially concluded that Snipes' reasonable recovery potential, based on its holdings and income, was much higher: $ 17,482,152. Despite this conclusion, Snipes did not increase his offer.

Snipes responded that his financial advisor, W. Johnson, had taken out loans on his assets without his knowledge. He provided an affidavit for that purpose, but not much else. Despite the lack of documentation, the adjudicator almost halved the initial reasonable recovery potential to $ 9,581,027 to resolve the problem. Snipes refused to yield, hanging on his initial offer of $ 842,061. The IRS finally rejected Snipes' offer altogether. Snipes sued, alleging abuse of discretion.

Kerrigan J. found no such abuse, noting that the Settlement Agent "had spent a great deal of time and effort in determining the Applicant's income and assets, as well as his interest in his assets, his trusts and its companies ". Justice Kerrigan concluded that he had not submitted "complete and up-to-date financial data" and that, as a result, "he has not demonstrated the economic hardship necessary to qualify." for special circumstances ".

(You can read the memo from the Tax Court of Canada here.)

So what's next? The offer was rejected. Generally, the IRS will continue to collect and continue to maintain federal tax liens previously filed against Snipes. The IRS may also attempt to seize its property through one or more taxes.

Do not confuse a privilege and a tax. A privilege acts as a placeholder. The purpose of the tax lien is to protect the interests of the government by warning creditors that the government is legally entitled to own your property. This is important because the government often has a priority claim: the lien tells creditors that they may not be on the front line if you do not pay for other debts. In reality, it affects your ability to obtain credit. If and when you sell one of your assets, you may have to pay the proceeds back to the IRS to settle your debt.

If you pay your taxes in full, the IRS will release the privilege. The IRS may also work with you to release the privilege in other circumstances, including to prove compliance when you are on a payment plan. Bankruptcy does not necessarily help you: a federal tax lien can survive even after bankruptcy.

On the other hand, a tax means that the government is taking steps to seize your property to pay your tax debt (to learn more about taxes here).

Privileges and deductions can be devastating financially, which is why it is important to quickly resolve your tax obligations. The IRS is willing to work with you and a reputable tax expert can help you navigate the sometimes confusing maze of options, including a compromise offer or installment plan. But do not think the IRS will accept this offer "one penny on a dollar" if they think they can reasonably collect more. An offer or payment plan must make sense.

Regarding Snipes? In addition to the real estate holdings in which IRS claims Snipes has interests, he still works in Hollywood. According to IMDB, Snipes has some ongoing projects, including a movie, Dolemite is my name, starring Eddie Murphy and Chris Rock. He also made an appearance at Comic-Con San Diego this summer where he fueled speculation that more than Blade the movies could be on the way.

">

Do you know the advertisements that promise to pay your tax debts for pennies? While there are ways to reduce your tax obligations, the Internal Revenue Service (IRS) will probably not do so unless you can demonstrate that you meet specific criteria, such as financial hardship. . Actor Wesley Snipes has learned that the hard way this week: the US Tax Court has rejected his offer to reduce his tax debt by millions.

Snipes' tax problems date back to 2006. That year, Snipes was charged with attempting to claim fraudulent repayment of nearly $ 12 million and not filing tax returns for several years. His first attorney, Billy Martin, said in a statement at the time: "We believe that the evidence presented will show that he was the victim of an unscrupulous tax council. And this trial will help justify it.

Snipes pleaded not guilty under all counts and the case was tried in 2008. Despite a long list of potential witnesses (including Muhammad Ali, Spike Lee, and Barbara Walters), and claimed that the defense could take up no more. at one month, the team's Snipes rested after less than an hour. The defense was convinced that the government had not proved its burden by saying, "We could have organized a big show, but we are not doing it. We will not waste the time of the jury. "

The prosecution has, however, submitted evidence that Snipes avoided paying taxes. IRS agent Steward Stich testified that Snipes earned close to $ 40 million between 1999 and 2004 and did not file a tax return or pay any taxes on that income. He also alleged that Snipes had also tried to recover nearly $ 12 million in taxes in previous years 1996 and 1997.

Snipes was acquitted of charges of tax evasion and conspiracy, and was found guilty of failing to file tax returns from 1999 to 2004. He was sentenced to three years in prison and the maximum sentence.

After his conviction, Snipes immediately promised an appeal, which he pronounced (more than once), stating, among other pleadings and exhibits, that his sentence was unreasonable, that his defense was lacking and that 39; he was not able to get a fair trial in Ocala, Florida, which Snipes had previously referred to as "KKK's focus of business". He was supposed to go to jail on June 3, 2008, but this was delayed while waiting for the outcome of the appeal. Eventually, his request for a new trial was dismissed and he went to prison at the McKean Correctional Institution on December 9, 2010.

While serving his sentence, Snipes again appealed his case, this time to the United States Supreme Court. On June 6, 2011, Snipes' petition for certiorari was dismissed, which means the court refused to hear the case.

Snipes was released from prison on April 2, 2013 after serving 845 days of his three-year sentence. He was back to work soon after.

It is important to note that serving a tax sentence does not erase your tax debt. When Snipes was released from prison, he still owed millions to the IRS. Snipes claimed not to have the money and filed a compromise offer (OIC).

A decree allows you to settle your tax obligations for less than the total amount you owe. In general, you submit an OCI because one of the following three things applies:

1. You do not believe that you owe the tax;
2. You can not pay the tax; or
3. There is no doubt that you have to pay the tax or you can pay it, but there are exceptional circumstances.

According to court documents, Snipes would have taken out a cash OIC of $ 842,061, less than 4% of its total underlying liabilities, stating, among other things, that it could not afford to pay debt. The offer was rejected. In response, Snipes appealed the US Tax Court.

Cases in the Tax Court are generally proceeding relatively quickly, at least in relation to other cases in federal courts. However, this one dragged on for years. Snipes filed his petition on November 5, 2015, and the trial was scheduled to take place on December 5, 2016. This hearing date did not occur. In October 2016, US Tax Court Judge Kathleen Kerrigan referred the case to the IRS Appeals Office. These discussions were not productive and on January 18, 2018, a new trial date was set for May 14, 2018. A few motions and some new lawyers later, the case was tried.

On November 1, 2018, Judge Kerrigan upheld the IRS's decision to reject the offer. Justice Kerrigan concluded that Snipes did not "provide authentic documents proving his assets and financial position". She compared her offer to what the IRS felt was her reasonable collection potential and determined that the IRS had not "abused" her discretionary offer.

What difference did it exist? At the time of filing, Snipes owed approximately $ 23.5 million (it should be noted that the debt of $ 1,497,645 in 2002 had finally been repaid). Snipes offered to settle for less than $ 850,000. The IRS initially concluded that Snipes' reasonable recovery potential, based on its holdings and income, was much higher: $ 17,482,152. Despite this conclusion, Snipes did not increase his offer.

Snipes responded that his financial advisor, W. Johnson, had taken out loans on his assets without his knowledge. He provided an affidavit for that purpose, but not much else. Despite the lack of documentation, the adjudicator almost halved the initial reasonable recovery potential to $ 9,581,027 to resolve the problem. Snipes refused to yield, hanging on his initial offer of $ 842,061. The IRS finally rejected Snipes' offer altogether. Snipes sued, alleging abuse of discretion.

Kerrigan J. found no such abuse, noting that the Settlement Agent "had spent a great deal of time and effort in determining the Applicant's income and assets, as well as his interest in his assets, his trusts and its companies ". Justice Kerrigan concluded that he had not submitted "complete and up-to-date financial data" and that, as a result, "he has not demonstrated the economic difficulties necessary to benefit from special circumstances ".

(You can read the memo from the Tax Court of Canada here.)

So what's next? The offer was rejected. Generally, the IRS will continue to collect and continue to maintain federal tax liens previously filed against Snipes. The IRS may also attempt to seize its property through one or more taxes.

Do not confuse a privilege and a tax. A privilege acts as a placeholder. The purpose of the tax lien is to protect the interests of the government by warning creditors that the government is legally entitled to own your property. This is important because the government often has a priority claim: the lien tells creditors that they may not be on the front line if you do not pay for other debts. In reality, it affects your ability to obtain credit. If and when you sell one of your assets, you may have to pay the proceeds back to the IRS to settle your debt.

If you pay your taxes in full, the IRS will release the privilege. The IRS may also work with you to release the privilege in other circumstances, including to prove compliance when you are on a payment plan. Bankruptcy does not necessarily help you: a federal tax lien can survive even after bankruptcy.

On the other hand, a tax means that the government is taking steps to seize your property to pay your tax debt (to learn more about taxes here).

Privileges and deductions can be devastating financially, which is why it is important to quickly resolve your tax obligations. The IRS is willing to work with you and a reputable tax expert can help you navigate the sometimes confusing maze of options, including a compromise offer or installment plan. But do not think the IRS will accept this offer "one penny on a dollar" if they think they can reasonably collect more. An offer or payment plan must make sense.

Regarding Snipes? In addition to the real estate holdings in which IRS claims Snipes has interests, he still works in Hollywood. According to IMDB, Snipes has some ongoing projects, including a movie, Dolemite is my name, starring Eddie Murphy and Chris Rock. He also made an appearance at Comic-Con San Diego this summer where he fueled speculation that more than Blade the movies could be on the way.