Wesley Snipes’ counsel rested his case without presenting a single defense witness or having Snipes himself testify. It is a move the minimizes risk on the stand but maximizes the likelihood of a conviction on the tax charges.

Snipes’ counsel has insisted that Snipes had a good-faith belief that he didn’t have to pay his taxes due to his reliance on a shady group of tax advisers. It is a hard defense to make to a group of tax-paying jurors who earn less in a year than he does in a week. To make matters worse, despite the right to remain silent, jurors expect people to testify — particularly when they insist that they were hoodwinked or tricked into committing a crime. Even worse still is when the government reads a bizarre and threatening letter to the prosecutors from Snipes. (Click here) For a juror, he appears willing to speak to the prosecutors but not the jury. Not a good context for a plea of mercy.

Snipes faces a difficult task given the high conviction rate on tax cases. His testimony could have turned it around. However, his letter and other conduct made cross-examination too great of a risk for counsel. It is hard to see how he could have convinced a jury without such defense witnesses or his own testimony given the implausible theory for withholding taxes.

Snipes and two other men are connected to a little known movement based on Section 861 of the Internal Revenue Code. This group argues that citizens are only required to pay taxed on earnings made outside but not inside the country. Snipes could be looking at real jail time for his involvement with the group even after he signed a affidavit of incompetence in 2000 that he does not understand his basic tax obligations.

The government has alleged that Snipes was fully aware that the 861 argument was a scam. He is accused of not filing any returns at all from 1999 to 2004 in addition to two false returns. If convicted, he could face up to five years in prison if the eight counts run concurrently — as they usually do. He will stand trial with Ray Kahn of Sorrento, Fla., and Douglas P. Rosile, of Venice, Fla.Kahn and Rosile allegedly filed to income returns for Snipes and claimed refunds totaling almost $12 million.

At the center of the alleged criminal enterprise is Kahn who was the founder and leader of American Rights Litigators (ARL) and its successor, Guiding Light of God Ministries (GLGM).The government has long watched both organizations, which allegedly consulted with taxpayers in advancing fraudulent tax claims and schemes. The 861 argument has been described as a “cult belief” by experts, click here It is a widely cited and false claim.

One of the leading peddlers of this theory has been Larken Rose, who wrote a popular analysis of the provision. Larken described how regulations can be read to mean that if you do do foreign commerce or work in the Northern Mariana Islands, your income is not subject to taxation.

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