“Business Solutions with Diane Chamness”

On a monthly basis, attorney Barry White and others from the law firm Weiss Berzowski Brady LLP talk with Diane Chamness on her radio program. The show, called "Business Solutions with Diane Chamness" is broadcast on WISN 1130AM from 1:00-2:00 CST.

On Saturday, May 3, 2008, I will be talking with Diane about personal and successor liability for Wisconsin sales taxes. We will also take calls concerning tax audits, appeals and collection matters. We hope you can listen in.

If you are outside of the listening area, you can tune in and listen live by visiting her website at http://www.dianeonbusiness.com/. Diane's show runs on a weekly basis at the same time and addresses various issue relevant to business owners.

Friday's Tax Quote.

"People who complain about taxes can be divided into two classes: men and women."

-Anonymous

Wesley Snipes Will Go To Prison

The Wesley Snipes tax evasion case was certainly the most high profile criminal tax case brought by the government in years. In spite of victories that he had in the trial court (acquittal on all felony charges). Mr. Snipes today learned what his sentence would be on the remaining three misdemeanors (failure to file) on which he was convicted.

A misdemeanor is a crime for which someone can be incarcerated for up to one year (a felony can result in a prison sentence of over one year). Today we learned that Wesley Snipes would serve the maximum sentence for his failure to file tax returns. Three Misdemeanors = Three Years.

That Snipes received the maximum sentence available suggests that while his attorneys were able to cleverly obtain acquittals of the felonies from the jury, the judge didn't agree with the arguments that were made. The judge would likely have handed down a lesser sentence if he had thought that the crime was limited to the misdemeanors. However, Wesley Snipes had avoided/evaded a substantial amount of taxes through teaming up with a group of people that are also facing their own consequences. The judge was certainly aware of how much went unpaid and how it was done. To hand down the maximum sentence, we can assume that he found Mr. Snipes' conduct eggregious.

One must wonder if the judge felt handicapped in handing down his sentence because he could only give three years. For this reason, Mr. Snipes should be very grateful for the acquittals that his lawyers got for him. If they hadn't done so, he could have been sitting for a much longer sentence.

If the $5 million dollar payment that Wesley Snipes has paid constitutes the tax, penalties and interest due, this case leaves two last interesting questions:

1) Will Wesley Snipes be sent to a minimum security prison camp (as is common in criminal tax cases) or will he end up in a more "prison-like" prison?

2) What is going to happen to all of the other people that participated in the same scheme that Snipes did?

It is not likely that each participant in the schemes will face criminal prosecution, rather, these other people can consider themselves to have benefited from Wesley Snipes' celebrity. However, we can safely assume that the government now has a list of names of all those people that participated in the American Rights Litigators and Guiding Light of God Ministries promoted schemes. These people will have to use the established IRS procedures to resolve their debts. Fortunately for them their, consequence will likely be limited to writing large checks made payable to "The United States Treasury."

IRS Summonses

A summons is an administrative tool used by the IRS to collect information concerning a taxpayer. A summons is best described as a forceful request by the IRS for documents or information. To enforce a summons, the IRS must bring an enforcement action in the District Court. When the matter is before the court, a judge will determine if the summons was properly issued, whether there are any valid defenses to the production of the documents and whether the summons must be complied with. Of course, in many circumstances, complying with a summons before court intervention is a good idea. For example, if there is no valid defense to producing the summoned information (attorney-client privileged, right against self-incrimination, etc.), the information should be provided. There is no need, however, to provide more information than is asked for in the summons. If you do receive an IRS summons that asks for your own information, it is likely well past the time for consulting a legal advisor. At this point, the IRS likely feels that you have been ignoring them.

When a summons is issued to a party other than the taxpayer being investigated (a third-party summons) the IRS must notify the target of the investigation of the issuance of the summons. The target has the right to bring a motion to quash the summons if he/she/it believes that some principal (attorney-client privilege, right against self incrimination, etc.) should prevent disclosure of the requested information. The recipient of the third- party summons should also consider whether the information requested by the summons should be disclosed. To make this determination, each request in the summons should be analyzed separately. A third party that receives a summons should make certain that it is required to turn over the information so that it is not violating a duty to the subject of the information.

John McCain's Tax Returns

As is probably clear, this blog is dedicated to discussing tax issues. In addition to talking about income, deductions, audits and tax problems, I will also write about current events. One of the big buzz tax related items recently in the news has been the release of the tax returns of the presidential candidates. In a previous post, I provided links to the tax returns of Hillary Clinton and Barak Obama (click here).

As promised in the prior post, I am now providing a link to John McCain's tax returns as available on his campaign website (click here).