Tax Debt Help – Timing of Snipes Trial Couldn’t Be Better for IRS
http://www.cnn.com/2008/CRIME/01/29/snipes.trial.ap/index.html
OCALA, Florida (AP) — Even Hollywood couldn’t have written a more ideal script for the Internal Revenue Service than actor Wesley Snipes’ tax-fraud trial.At a time when millions of Americans are buckling down to prepare their taxes, Snipes is being cast as a villainous example of the dangers of joining with Internet-fueled activists who claim the IRS has no authority to collect taxes.Snipes, the star of the “Blade” films and “White Men Can’t Jump,” is on trial with two tax protesters in one of the biggest criminal cases in IRS history, and the agency hopes the media attention on the matter will dissuade others in the “tax avoidance” movement from trying to outwit the government.“
People who do it openly and notoriously, you’ve got to go after them,” said Sheldon Cohen, who was IRS commissioner and general counsel in the 1960s. “Not because he’s that important or the amount of money is that important, but because there are others who may be foolish enough to follow.”
Snipes, 45, could get up to 16 years in prison if convicted on all counts, although sentences that long are unusual.His two co-defendants are an anti-tax ideologue who refuses to defend himself in court and an accountant who lost his licenses. The trio rested their defense Monday without calling any witnesses, saying they didn’t need to.“Nobody likes paying taxes, but paying taxes is the price we pay to live in a civilized society,”
Assistant U.S. Attorney M. Scotland Morris said Tuesday in closing arguments. “And it’s the law, and that’s what this case is about. It’s about three men who felt they were above the law.”Defense attorney Robert Barnes conceded Snipes’ arguments may have been crazy, but insisted that didn’t make them criminal.“Disagreement with the IRS is not fraud of the IRS, is not deception,” Barnes said. “It was an attempt to engage the IRS, to go through the IRS procedures and processes and see who’s right.”In lengthy filings to the IRS, the three defendants claimed they did not legally have to pay taxes, citing an obscure section of the tax code that establishes that foreign sources of income for U.S. citizens are taxable.
Protesters take that to mean only foreign sources are taxable, and wages made in this country are not.“They string unconnected things together in a way that they’re just not intended to be strung together,” said Chris Rizek, a former Treasury Department lawyer who specialized in tax policy. “And the courts have repeatedly said ‘No, that’s the wrong interpretation, listen to this.’ And they just don’t listen.”Snipes, who is free on $1 million bond, was paying millions in federal income taxes until 2000 when, according to prosecutors, he accepted the arguments of his two co-defendants.
Snipes then began seeking nearly $12 million in illegal refunds for taxes he already paid.Snipes, alleged ringleader Eddie Ray Kahn and former CPA Douglas P. Rosile were indicted on eight counts alleging tax fraud, conspiracy and willful failure to file returns. Kahn now refuses to leave his jail cell because he believes the court has no jurisdiction to prosecute him.The government says Kahn founded a group in the 1990s, American Rights Litigators, and a successor group, Guiding Light of God Ministries, that purported to help members legally avoid paying taxes. Rosile, a former accountant who lost his licenses in Ohio and Florida, prepared the paperwork.
Snipes joined their group in 2000.Witnesses for the prosecution have said up to 4,000 people refused to pay taxes based on the group’s arguments.
The three men claimed the IRS is not a legitimate government agency. Snipes also argued in long, bizarre letters that he was a nonresident alien; that the IRS terrorizes and deceives citizens; and that efforts to prosecute him would cause “increased collateral risk.”Most tax cases are handled in civil court, because the IRS does not have enough agents or time to pursue criminal charges against ordinary taxpayers who fudge a deduction or a decimal place on their tax returns.But pursuing the matter in criminal court carries other risks — the burden of proof is higher, and an acquittal would instantly galvanize the tax-avoidance movement, which already enjoys boundless exposure on the Internet.The IRS has been successful in pursuing criminal cases against the movement’s followers.
Last year, for example, a New Hampshire tax protester vowed to die fighting rather than be apprehended following criminal conviction on several tax charges. Several people were arrested trying to help Ed Brown and his wife avoid capture, and almost all of them were from other states.Brown and his wife were taken peacefully, but only after agents tricked the couple into surrender.
But there are exceptions. In 2003, FedEx pilot and tax protester Vernice Kuglin was acquitted because the jury found she sincerely believed she didn’t have to pay taxes.Kuglin’s assets were seized, and the government got its tax money.
Despite that, her case is held by some protesters as proof that the IRS is a sham, and citizens really don’t have to pay taxes.Cohen, the former IRS commissioner, said trials like Snipes’ are important to discourage potential tax scofflaws from defying the government.“Locks are important on windows to keep honest men from becoming thieves,” Cohen said. “Because a thief can get into a window even if it’s locked, right? But you do that as a deterrent.”
Tax Debt Help – Does the “Tax Man” need a Resolution Service?
When I opened my email at work today, there was an article from one of our Ex-IRS agents regarding a scheme to defraud the Federal Government by a federal IRS employee. Wonder if the Tax Man will need the services of a tax resolution service such as Effectur, Inc?
THURSDAY, APRIL 26, 2007
FORMER IRS DISTRICT DIRECTOR PLEADS GUILTY TO $1.3 MILLION TAX FRAUD
WASHINGTON – A former Internal Revenue Service (IRS) district director, pleaded guilty today to conspiring to defraud the United States through his involvement in a tax fraud scheme promoted by the Topeka, Kansas-based “Renaissance, The Tax People, Inc.,” the Justice Department and the Internal Revenue Service announced. During a hearing before U.S. District Judge Carlos Murguia in Kansas City, Kan., Jesse Ayala Cota admitted defrauding the U.S. Treasury of more than $1.3 million and to earning more than $300,000 from his participation in the scheme.
Cota, 65, of Vista, Calif., admitted in his plea agreement that from 1997 though April 2002, the conspirators, through Renaissance, operated a scheme to defraud the government and individuals by marketing a program designed to sell illegal tax deductions through false and misleading representations. His co-conspirators, Todd Eugene Strand and Daniel Joel Gleason, previously pleaded guilty to the same fraudulent scheme. Additionally, Cota admitted that during his participation in the conspiracy, those involved prepared or had others prepare false federal income tax returns resulting in a tax loss of approximately $1.3 million.
“The Justice Department’s Tax Division has made it a priority to stop tax fraud schemes by identifying, investigating and prosecuting those who promote them and those who use them,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “These schemes are a fraud on the federal Treasury, and an insult to all who pay the taxes the law requires.”
Cota also admitted that he and his co-conspirators falsely assured their clients and others that Renaissance’s tax system was legal. Cota acknowledged that on Oct.16, 2000, a co-conspirator sent an e-mail message to customers falsely asserting that there existed written endorsements from “over 2,000 tax attorneys, enrolled agents and CPAs (certified public accountants) that every strategy contained in the Tax Relief System is absolutely sound, unassailable and proven over the past 40 years.” The e-mail also falsely claimed that “[t]he
training offered by Renaissance, the Tax People, through the Tax Relief System . . . was approved for continuing education credit for CPAs in all 50 states.”
“Mr. Cota was the director of Renaissance’s so-called ‘Tax Dream Team,’” said Eric Melgren, U.S. Attorney for the District of Kansas. “Renaissance used Cota’s credentials as a former district director for the Internal Revenue Service to lend the tax fraud scheme legitimacy and to induce people to join and to remain members.”
Renaissance used Cota’s IRS credentials, including his prior service as District Director, to induce people to join Renaissance, to assuage their concerns, and to keep them as members.
“This is an example of someone implying he has ‘insider information’ to help others enrich themselves by buying into his bogus tax avoidance system. However, what he sold was long-term legal and financial problems for those who bought his advice,” said IRS Criminal Investigation Chief Eileen C. Mayer. “Don’t be misled by promises of some secret path known only to insiders that is supposed to lead you to freedom from paying income taxes. There is no such path and there are no such secrets.”
Today’s plea brings the number of individuals who have pleaded guilty to felony charges in this and other Renaissance-related cases to seven, including Strand, Gleason, Thomas Steelman, Frankie Ruth, Elizabeth Crotts, and Alexander Federico.
Cota faces a potential maximum sentence of five years in prison followed by up to three years of supervised release, a $250,000 fine, and liability for the costs of prosecution. U.S. District Judge Carlos Murguia scheduled sentencing for January 2008. This case was investigated by the Internal Revenue Service, Criminal Investigation Division and the U.S. Postal Inspection Service.
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