White Men Can’t Jump and Wesley Snipes can’t interpret Federal Income Tax laws. Actor, Wesley Snipes, known for his portrayals in Blade, White Men Can’t Jump,

 

Demolition Man and U.S. Marshals is currently in Federal Prison for failing to file Federal Tax Returns. He was convicted on 3 misdemeanors and only narrowly escaped being convicted on a list of felonies.

 

Mr. Snipes followed a poorly written script. He failed to file Federal Income Tax Returns for the tax years of 1999 through 2004 despite taking in $38 million from his services as an actor. However, he did not stop there. He also filed amended Returns for 1996 and 1997 claiming that he erred in declaring his “wages” as being income and demanded roughly $7 million in refunds. These antics put him in front of the cameras with U.S.

 

Marshals rather than in “U.S. Marshals”.

 

Among Mr. Snipes’ legal arguments was that what he earned was “wages” but that wages were not defined in IRC Section 861 as being “taxable income”. Mr. Snipes claimed that IRC Section 861 describes income from the performance of services as being taxable but does not actually use the word “wages”.

 

Unfortunately for Mr. Snipes, he not only misinterpreted the clear language of IRC Section 861, but failed to acknowledge the holy grail of “income” definitions, IRC

 

Section 61 which states:

 

IRC Section 61 (a): Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

 

  • Compensation for services, including fees, commissions, fringe benefits, and similar items;

 

  • Gross income derived from business;
  • Gains derived from dealings in property;
  • Interest;
  • Rents;
  • Royalties;
  • Dividends;
  • Alimony and separate maintenance payments;
  • Annuities;

 

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  • Income from life insurance and endowment contracts;

 

  • Pensions;
  • Income from discharge of indebtedness;
  • Distributive share of partnership gross income;
  • Income in respect of a decedent; and
  • Income from an interest in an estate or trust.

 

Few could argue with a straight face that income from the performance of services does not include income called “wages”. Even if they could, how do they claim that “wages” are not among the items included in the broad definition of “…gross income means all income from whatever source derived,…”. Finally, the words “…including (but not limited to) the following items:” means that items on the list are examples rather than the entire universe of income categories.

 

Mr. Snipes was not done yet, he went on to claim that he was a non-resident alien and, as such was not subject to the U.S. Income Tax laws. Of course, Mr. Snipes was born in the U.S. and was a U.S. Citizen despite his claim that he had renounced his citizenship. Even if that were not the case, working and living in the U.S. alone may have subjected him to Federal Income tax even if he were not a U.S. Citizen.

 

Although he may be the most high profile, he is not alone in making false legal claims or attempts to “misconstrue” the law. They are often referred to as “tax protestors”. There are a number of theories that have been used by taxpayers to avoid filing Returns or reporting income. Here are some of the arguments used by tax protestors over the years:

 

  1. Voluntary: Some taxpayers claim that filing Federal Income Tax Returns and payment of tax is voluntary. They base this on certain IRS publications that use the word “voluntary” and the language of a U.S. Supreme Court decision in Flora v. United States, 362 U.S. 145, 176 (1960) that states “…our system of taxation is based upon voluntary assessment and payment, not upon distraint.” These tax protestors claim that since it is voluntary, they can freely elect to file or elect not to file.

 

Of course, this has no support in the language of the statutes or in their interpretation by the courts. Although the word “voluntary” is used by the IRS and the language of Flora is properly quoted, compliance with the Federal Income Tax laws is not voluntary. “Voluntary” is only used to mean that our system allows taxpayers to initially determine the correct amount of income and expenses on their Returns rather than it being the job of the IRS to make the initial determination of tax and send taxpayers the bill. See IRC Sections 6011 and 6012. In fact, IRC Section 1 (yes, the opening words of the entire Internal

 

Revenue Code) begins with the words, “Tax Imposed”.

 

 

 

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  1. IRS Obligated to Prepare Returns: Some taxpayers claim that if they elect to

 

“voluntarily” not file, the IRS is then obligated to prepare their Returns for them. They go on to claim that if the IRS fails to prepare their Returns, it is the IRS’ fault, not theirs.

 

Of course, this has no support in the language of the statutes or in their interpretation by the courts. While the IRS may make determinations of income and tax for assessment purposes, the government has no obligation to do so. Further, taxpayers are not relieved of their obligations just because the IRS does not go after them.

 

  1. Zero Dollar Returns: Some taxpayers claim that while they must file Returns, they can elect to not fill in any income on the Returns (or fill in all zeros). Often, they will attach copies of their Form W-2’s to support a claim for a refund of the income tax that was withheld by their employers.

 

Of course, this has no support in the language of the statutes or in their interpretation by the courts. In fact, courts have found that zero dollar Returns not only fail to properly report income, they also constitute a failure to even file since they do not represent a reasonable attempt to comply with the filing requirements.

 

  1. Sixteenth Amendment Argument: The Sixteenth Amendment to the U.S.

 

Constitution provides that Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

 

Some taxpayers claim that the Federal Tax laws are unconstitutional because the Sixteenth Amendment to the U.S. Constitution was never properly ratified.

The basis of their argument is that two thirds of the states must ratify a constitutional amendment as a necessary part of the process. They claim that the language ratified by each state was not identical, word for word, to each other state and/or not exactly the same as the Sixteenth Amendment

 

Of course, this has no support in the law and the courts, (including the U.S. Supreme Court) have always upheld the constitutionality of the Sixteenth

Amendment and the existence of Federal tax laws.

 

  1. Federal Territories: Some taxpayers claim that the Federal Tax laws only apply to the land designated as federal (e.g. District of Columbia, Puerto Rico, and Guam) and federal enclaves such as federal military bases and American Indian

 

Reservations. Often the argument goes on to claim that they can validly be a citizen of one of the 50 states but not be a citizen of the United States since they do not live in one of the aforementioned federal lands.

 

 

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Of course, this has no support in the law or the courts for defining a U.S. Citizen as only being those that live in the aforementioned federal land areas.

 

  1. Person versus Individual versus Taxpayer: Some taxpayers claim that the

Federal Tax laws do not apply to them because they are not a “person” or an “individual” as defined in the Internal Revenue Code.

 

Of course, there is no support in the law or court rulings to support a claim that an individual is not a person or that a person or individual cannot be a taxpayer subject to the Federal Tax laws. The Internal Revenue Code defines “taxpayer” as being any person subject to any internal revenue taxes. See Section 7701(a) (14). Further, the definition of “person” includes an individual, trust, estate, partnership, or corporation.

 

  1. Religious or Moral Rights: Some taxpayers claim that they may legally refuse to pay Federal Income Tax based upon perceived First Amendment rights. That is, since some Federal programs violate their religious or moral beliefs, they can refuse to contribute money that could then be used to support those programs.

 

Of course, there is no support in the law or court rulings to support a claim that an individual can refuse to comply with the Federal Income Tax laws based upon their First Amendment rights. The payment of Federal Income Tax does not establish a religion or prohibit the exercise of religion.

 

  1. Due Process: Some taxpayers claim that they may legally refuse to pay Federal

 

Income Tax claiming that it constitutes a “taking” of property without due process in violation of the Fifth Amendment.

 

Of course, there is no support in the law or court rulings to support a claim that an individual can refuse to comply with the Federal Income Tax laws based upon their Fifth Amendment rights. The payment of Federal Income Tax does not violate due process.

 

  1. Protection Against Self-Incrimination: Some taxpayers claim that they may legally refuse to file Income Tax Returns claiming that it violates their rights against self-incrimination in violation of the Fifth Amendment.

 

Of course, there is no support in the law or court rulings to support a claim that an individual can refuse to comply with the Federal Income Tax laws based upon their Fifth Amendment privilege against self-incrimination. The payment of Federal Income Tax does not establish a religion, prohibit the exercise of religion, abridge free speech, freedom of the press or the freedom to assemble.

 

Conclusion:

 

It has recently become popular for some politicians to position their views as being based upon the U.S. Constitution. Unfortunately, some do not even know what the

 

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Constitution or Amendments even say, let alone go beyond that to interpret the meaning. Others know the words and meanings but try to construe them in a way that supports their views, however tortured. Tax protestors, including Wesley Snipes follow a similar path by cherry picking words out of context, tortured interpretations, or outright refusal to acknowledge the obvious and clear truth. While politicians may simply end up as the butt of a joke on the Colbert Report, tax protestors often end up in jail.

 

 

02/2011

 

Copyright ©, Keith B. Baker – 2011

 

This article is designed to be a public resource of general information. It does not constitute “legal advice” nor does it create a “client-attorney” relationship. While the information is intended to be accurate, this cannot be guaranteed. Tax laws are complex and constantly changing as a result of new laws, regulations, court interpretations and IRS pronouncements. Often, there are also various possible interpretations. Further, the applicable rules can be affected by the facts and circumstances of a particular situation. Because of this, some of the information may no longer be correct or may not apply to all situations. We are not responsible for any consequences or losses resulting from your reliance on such information. You are urged to consult an experienced lawyer concerning your particular factual situation and any specific legal questions you may have.

 

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Any discussion of federal tax issues in this correspondence may constitute “written tax advice”. Any such advice is limited to the issues specifically addressed, and the conclusions expressed may be affected by additional considerations not addressed herein. Any tax information or written tax advice contained herein (including any attachments) is not intended to be, and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)

 

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