The Cheek Defense: Why It Didn't Work for Wesley Snipes

By Justin Rohrlich  DEC 09, 2010 3:30 PM

Proving criminality in tax cases can be complex, but the IRS always get their money in the end.

 


Wesley Snipes reported today to FCI McKean in Lewis Run, Pennsylvania, a minimum security federal correctional facility, where he will serve a three-year sentence on three misdemeanor counts of willful failure to file income taxes.

Snipes’ attorneys based their case on what is known as the “Cheek Defense,” so-named for the strategy used by tax protester and American Airlines (AMR) pilot John Cheek in 1988.

The government bears an interesting burden of proof in tax cases. The defendant must be shown to have acted with willful and malicious intent to defraud in order to be convicted of criminal charges. Cheek, who acted as his own lawyer, maintained that, since he had a good faith belief his income wasn’t subject to taxation, he must be found innocent.

The jury found Cheek guilty.

Then, in 1991, the Supreme Court reversed the ruling. They found that, as explained by the New York Times,

…taxpayers who sincerely believe the Federal income tax laws do not apply to them cannot be convicted of criminal tax violations, even if there is no rational basis for their belief. But at the same time, the Court said a belief that the tax is unconstitutional, as opposed to inapplicable, is not a shield against criminal liability for refusal to pay taxes.

Cheek was re-tried and was again found guilty. He was ordered to pay his taxes and spent a year and a day behind bars.{FLIKE}Snipes, who became a tax-denier after learning that his 1999 income tax would exceed $2 million, attempted the same maneuver. His lawyers argued that his beliefs may have been “kooky,” “crazy” and “dead wrong,” but that did not constitute criminal intent.

The judge didn’t agree, finding that Snipes showed a “history of contempt [for tax laws] over a period of time,” and that he committed “serious crimes, albeit misdemeanors.”

Of this particular defense, Jonathan Siegel, a George Washington University law professor on sabbatical while serving as Director of Research and Policy for the Administrative Conference of the United States, writes:

It will be up to you to convince the jury of what your beliefs were, and it will be up to the jury to make the ultimate determination of whether you did or did not truly believe that you didn’t owe any taxes. After all, you could be lying. You might know very well that you owe taxes, but be lying strategically in an effort to avoid prison. Since your inner beliefs are not subject to conclusive demonstration, it will be up to the jury to figure out what you really believed.
So while it is true that a genuine belief that you don’t owe taxes means that failure to pay is not a crime, and while it is true that a tax protester gets acquitted on this ground every now and again, if you adopt this strategy, you’re putting your freedom at considerable risk. You’re banking on what some jury is likely to conclude about your beliefs. If the jury finds that you believed you owed taxes and deliberately did not pay [pdf], you’ll be heading for jail.

In an interview with Minyanville, a CPA who requested anonymity for this article said:

“When someone doesn’t get convicted of the most serious criminal charges in a tax case, these tax-protest groups claim victory. But it’s not a win, because the person on trial still has to pay his taxes, which is all the government really wanted in the first place.”

The US tax code may be incredibly complex, but at its core, it’s actually quite simple -- if you are an American citizen, you must pay taxes on your earnings. After all, how else would H&R Block (HRB), Jackson Hewitt (JTX), and Intuit (INTU), the company behind TurboTax -- pay theirs?
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