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The Internal Revenue Service says that from 1999 to 2004, actor Wesley Snipes didn't file tax returns... and his income during that time was a whopping $37.9 million. What's more, he was told in 2002 that he was being criminally investigated, but he continued to not file.

How did this happen? Apart from possibly internalizing Leona Helmsley's sage advice ("Only the little people pay taxes"), Snipes hooked up with Eddie Ray Kahn, a known tax protester who had been banned from filing tax returns for others because of his shenanigans with a group called American Rights Litigators.

In addition to not filing tax returns, he also is accused of trying to get fraudulent refunds for over $11 million of taxes paid in 1996 and 1997. Snipes was warned on more than one occasion that he was in trouble for his tax-related activities, but it doesn't seem to have bothered him.


The trial begins today near Orlando, Florida, where prosecutors say Snipes lived when he committed his tax fraud. The government says that at the time the fraud was committed, Snipes signed deals for the movies "Blade II" and "Blade: Trinity," and each deal was worth more than $10 million.

Taxes on almost $38 million of unreported income? Huge. Interest and penalties? Huge as well. Possible imprisonment if criminally convicted? Priceless.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.

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