Actor Wesley Snipes is still on the hook for a $23.5 million IRS tax bill, after the U.S. Tax Court rejected his claim that he couldn’t pay.
The court denied a settlement offer—to pay less than 4 percent of the total liability—because Snipes didn’t prove “economic hardship,” according to a Nov. 1 opinion.
The actor has a history of trouble with the Internal Revenue Service. Snipes was convicted in 2008 for failing to file income tax returns for 1999, 2000, and 2001 after becoming involved with American Rights Litigators. The group claimed that domestic earnings of Americans don’t qualify as taxable income.
In the current case, Snipes failed to pay millions in taxes from 2001 to 2006.
An IRS settlement officer spent “considerable time and energy” determining Snipes’ reasonable collection potential—liquid assets and equity in property that can be used to secure a loan, the opinion said. The initial settlement offer was $17.5 million, and was later reduced to $9.5 million in an attempt to recover at least part of the taxes owed.
Snipes held throughout settlement negotiations that he would be “unable to meet basic living expenses” if he agreed to the IRS agent’s offer and countered with a settlement amount of $842,061.
The court ruled that Snipes failed to prove economic hardship, and said it grants such concessions only to taxpayers who can show that their resources are needed for the treatment of a serious illness, care for dependents, or basic living needs.
The case is Snipes v. Commissioner, T.C. Memo 2018-184, T.C., No. 27902-15L, 11/1/18.