Wesley Snipes has been in negotiations with the IRS since 2006 when he was first charged with failing to file tax returns and attempting to claim fraudulent tax refunds. According to the IRS agent assigned to his case, Snipes failed to file tax returns for tax years 1999 through 1994 during which time he earned almost $40 million. He was also charged with tax fraud for trying to claim tax refunds totaling $12 million for tax returns returns filed in 1996 and 1997. When he went to trial, he was acquitted of felony tax fraud charges but received the maximum sentence of three years for failure to file tax returns for the six years in question.
Although Snipes appealed his case while he was in prison, the appeal was denied. As a result, he still owed the IRS millions of dollars in back taxes when he was released in 2013. Claiming that he did not have the funds to cover the full amount of the tax debt, he submitted an Offer in Compromise petition for $842,061, less than 4% of his back tax balance of $23.5 million! When the offer was rejected it, his case went back and forth between the Unites States Tax Court and the IRS Appeals Office until earlier this month when U.S. Tax Court Judge Kathleen Kerrigan ruled to uphold the original IRS decision. Her pronouncement was based on the fact that Snipes had failed to provide adequate documentation of his financial condition and that his offer did not accurately represent his “reasonable collection potential.”
In order to resolve the matter once and for all, the IRS eventually offered to settle the debt for $9,581,027 even though they determined that his reasonable collection potential was almost double that amount. However, when Snipes refused to accept the terms of the proposed tax settlement agreement, the IRS rejected his offer altogether. Judge Kerrigan pointed out that the IRS representative had spent a considerable amount of effort evaluating the case and had found no evidence that Snipes would suffer an economic hardship by paying the amount of the settlement offer. Only time will tell how this case of Wesley Snipes will be resolved. The IRS will certainly continue to hold the tax liens that are already in place and may eventually try to seize one or more of his properties by imposing a tax levy.
If you have an outstanding tax liability, the tax professionals at Los Angeles Bookkeeping can help you resolve it. Conveniently located in Beverly Hills, California, Los Angeles Bookkeeping is a group of Certified Public Accountants and licensed Enrolled Agents who have helped many satisfied clients resolve back tax balances. So don’t wait! Contact the tax professionals at Los Angeles Bookkeeping today to settle your tax debt before the IRS initiates collection activities. Schedule a free, no obligation consultation by emailing us at email@example.com or calling 310-765-1596.