Wesley Snipes’ Lowball Offer in Compromise Rejected in Tax Court

Wesley Snipes was once best known for his work as an actor, particularly for his role as the vampire-hunting Marvel superhero, Blade. Unfortunately, when Snipes makes headlines these days, it’s usually due to his ongoing tax battle with the IRS.

Snipes’ tax woes first hit the public spotlight in October of 2006, when he was charged with felony tax fraud and conspiracy. Though Snipes would be acquitted of these felony charges, he was ultimately convicted of three misdemeanor counts of failing to file tax returns between 1999 and 2004 and sentenced to jail time. The actor argued against this conviction, insisting that he didn’t get a fair trial. The U.S. Supreme Court ruled against him, and Snipes served three years between 2010–2013. Shockingly, this wasn’t the end of Snipes’ tax drama.

In 2013, Snipes still owed $23.5 million in back taxes from 2001 through 2006. Snipes made an offer in compromise (OIC) of $850,000 — barley 4 percent of his total debt. An officer from the IRS was sent to determine Snipes’ assets and financial condition, though Snipes refused to cooperate with the investigation. When the officer denied his OIC, Snipes then accused the IRS of abusing its discretion and took them to court. The tax court sided with the IRS.

Though the IRS reduced their settlement offer to $9.5 million, Snipes refused to increase his original offer. He insisted paying the bills would send him into “economic hardship.” Economic hardship usually applies in cases of long-term illness, medical condition, disability, or monthly income being exhausted from caring for dependents. As Snipes didn’t fit any of these criteria, his case was denied.

The IRS’ decision to deny Snipes’ low OIC was upheld again by U.S. Tax Court Judge Kathleen Kerrigan in November of 2018. Kerrigan stated that accepting Snipes’ OIC would not be in the best interests of the United States. Someone should remind Snipes that, while the IRS is willing to work with people, they aren’t going to give up as easily as vampires at sunrise.