IRS didn't tell Snipes he had to file, lawyer says

But the prosecutor says the actor made millions in years he didn't pay taxes.

By KEVIN GRAHAM, Times Staff Writer
Published January 17, 2008

Actor Wesley Snipes signs autographs after coming out of U.S. District Court in Ocala on Wednesday after opening statements in his tax evasion trial. Snipes is accused of failing to file tax returns from 1999 to 2004.
	[AP photo]

OCALA - Wesley Snipes wanted answers.

Did the Internal Revenue Service owe him money?

Did he owe the government?

An attorney for the star of White Men Can't Jump and the Blade trilogy said in federal court Wednesday that Snipes tried repeatedly to schedule a meeting with the IRS.

No one with the agency would explain whether Snipes, 45, had to file a return at all, said Robert Bernhoft, Snipes' lead defense lawyer for his tax evasion trial in Ocala.

"We can't tell you whether you're supposed to file a tax return until you file a return," the IRS told Snipes, according to Bernhoft.

"Welcome to the wacky world of the IRS," the attorney told jurors during his opening statements.

Bernhoft said it took six years for the IRS to respond to written requests from Snipes, who wanted to know if he was correct to file for refunds totaling $11.4-million on taxes he paid in 1996 and 1997.

When an IRS agent contacted Snipes in May 2002, he informed the actor of his rights and told him the IRS had launched an investigation, Bernhoft said.

"Wesley Snipes told the IRS that he stood ready to pay any and all taxes that the law required," Bernhoft said, characterizing Snipes' position as, "Maybe you owe me money. Maybe I owe you money. At the end of the day, let's work this out in a civilized fashion."

Instead, Bernhoft said, Snipes was charged with a crime.

The U.S. Attorney's Office announced an indictment against the Orlando native in October 2006, charging Snipes with filing false tax claims. The government also charged him with six counts of failure to file returns from 1999 to 2004.

Interim U.S. Attorney Robert O'Neill, lead prosecutor in the case, displayed a detailed time line in court that showed Snipes earning millions during years he filed no returns.

O'Neill said Snipes earned $1.4-million to $13.5-million annually from 1999 to 2004. The amount of taxes he paid those years: zero.

O'Neill said Snipes aligned himself with American Rights Litigators, a Lake County firm whose financial advisers' focus was "to thwart the process of the IRS."

"You don't have to take my word for it," O'Neill told jurors. "You will see the documentation. It will all come out in trial."

Eddie Ray Kahn, a convicted tax felon who ran American Rights Litigators, and Douglas Rosile, an accountant who worked part time for Kahn and prepared Snipes' amended tax forms, are co-defendants, charged as conspirators.

Prosecutors alluded to forthcoming testimony about Internal Revenue Code Section 861, which some tax protesters believe excuses Americans from paying taxes on income earned in the United States. Courts have rejected the theory, and O'Neill described it as "a bizarre, gibberish idea."

Bernhoft presented his own extensive time line covering much of the same period discussed by O'Neill.

In Bernhoft's version, Snipes began in 2000 to question advice from Starr & Co., an investment firm that prepared his taxes. Kahn's firm told Snipes that Starr & Co., headed by Kenneth Starr, was giving him bad tax guidance.

When actor Sylvester Stallone sued Starr, alleging mismanagement of his money, Snipes became even more suspicious, Bernhoft said. Snipes audited his account with Starr's group and discovered mismanagement of his own money, said Bernhoft.

By 2000, American Rights Litigators had taken on Snipes as a client, telling him that the IRS owed him millions in refunds.

"He was getting conflicting views from tax advisers," Bernhoft said.

So Snipes asked for an audit.

"This is not a case where the IRS came knocking on the door and Mr. Snipes ran into the back room and hid in the closet," Bernhoft said. "Wesley Snipes tried to engage the IRS, and they did not answer."

The trial, which began Monday with two days of jury selection, is expected to last a month. Snipes could get a maximum of 16 years in prison if convicted.

Kevin Graham can be reached at kgraham@sptimes.com or 813 226-3433.

[Last modified January 17, 2008, 01:01:25]