Friday, October 27, 2006


Who among us has not fantasized how much better life would be without the big bite the IRS takes out of our earnings? Whose mind has not meandered back in time to think of how the robber barons of the late 19th and early 20th centuries amassed their family fortunes untrammeled by the dampening effect of income taxes?

Yet who but Wesley Snipes and a few other intrepid characters have had the gall to request $12 million in federal income tax refunds and to fail to file federal income tax returns for years on the purported basis that the IRS has no right to tax income earned in the U.S.?

Don't know what I'm talking about? Well, let's backtrack a few steps to fill you in on the latest great case of alleged tax fraud, before we proceed to discuss the relationship between the Wesley Snipes saga and your property taxes.

In short, two weeks ago, top box office draw Wesley Snipes was indicted on federal criminal charges for his alleged role in a bizarre tax avoidance scheme that allegedly included his seeking $12 million in fraudulent refunds and failing to file tax returns for 6 years.

An eight-count indictment filed in U.S. District Court in Ocala, Florida, and unsealed on October 17, charged Snipes, his former accountant, and a third defendant with attempting to defraud the government by claiming that his substantial income was immune from taxation.

The indictment alleges that Snipes conspired with one other person in addition to former certified public accountant Douglas Rosile in the scam. The third person indicted is the founder of a Florida corporation (now known as Guiding Light of God Ministries) which, it is alleged, "promoted and sold fraudulent tax schemes."

The essence of the claim on which the alleged fraud is based is that U.S. citizens can be taxed only on income earned from certain foreign-based activities and not on money made in the U.S. This claim is known as the "861 argument." The name derives from the section of the internal revenue code to which it refers. Unfortunately, the argument has been resoundingly rejected by the Internal Revenue Service. As part of the alleged scheme, Snipes filed amended tax returns seeking $12 million in refunds on taxes he paid in 1996 and 1997.

Snipes's participation in the bold effort at tax avoidance came to the fore in 2002, when the Department of Justice sought an injunction against Snipes's former CPA. As an exhibit to the motion for restraining order, DOJ attached a copy of Snipes's amended 1997 tax return, which his CPA had prepared. To review the amended return, click here

Snipes sought a $7.3 million refund of taxes previously paid on his $19.2 million in 1997 earnings. The amended return was premised on the assertion that the star's income was "not from a taxable source." The form contained a charmingly revised affirmation next to the form's signature line. The return was (unlike yours and mine)
filed "Under no penalties of perjury."

So what's all this have to do with property taxes, the subject matter of this blog, you ask? Well, the answer is that it invites us to take another look at Benjamin Franklin's coinage, "Nothing's inevitable save death and taxes." And it invites us to steer a middle course between the government's position on property taxes--which the layman frequently assumes is, "They'll take as much as they can get" and Wesley Snipes's approach, which evidently was, "They're not going to get anything from me."

We've said it before. Now we'll say it again. While liability for some amount of taxes may be inevitable, the amount of taxes you pay is not inevitable. It is subject to study and review and planning. On the federal income tax side, this is work to be done with your accountant. On the property tax side, this is work to be done with your property tax lawyer or other professional.

One cheerful development in our practice is that we find more and more taxpayers consulting us on property tax issues before they act rather than after. This means before demolition and reconstruction of a homestead residence, or prior to sale or purchase of commercial, industrial or residential property; any time valuable property tax benefits may be at stake.

So don't learn only from your own mistakes. Learn from Wesley Snipes's predicament, too. Work with your property tax professional to try to trim your taxes--but take a leaf from Benjamin Franklin, too, and don't expect to eliminate your taxes altogether!

The next entry of this blog will be an edition of Florida Property Tax News describing two property tax reductions we recently obtained on land valuations in Orange County, Florida, reducing one assessment from $96,000 to a nominal $1,000 and the second from $48,000 to $1,000. We didn't eliminate the taxes altogether, but we got pretty close!
Daniel A. Weiss is a former Attorney Special Master for the Miami-Dade County Value Adjustment Board with over 25 years property tax experience. Mr. Weiss represented the Miami-Dade County taxing authorities in litigation and appeals between 1981 and 1995 and has since represented taxpayers in property tax matters. In Florida Super Lawyers 2006, Weiss was named one of the top 6 local government lawyers in South Florida.

In Florida Trend magazine™'s Legal Elite's issue, July 2004, Mr. Weiss was selected by his peers as one of the top 30 government lawyers in the State of Florida.

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