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NOTHING IS CERTAIN
Analyst JJ MacNab talks Wesley Snipes and the tax-protest movement.
words: Neal Anderson
NOTHING IS CERTAIN
words: Neal Anderson
ON April 24, 2008, actor Wesley Snipes stood up in an Ocala, Florida federal courtroom and made a
statement prior to his sentencing for conviction on tax-evasion charges.
"I asked this court to show me mercy and the opportunity to set things right…This will never happen again.
I am very sorry for my mistakes or my errors."
Snipes went on to claim that he had been misled by his onetime tax-attorneys-slash-co-defendants, and
then voluntarily presented the court with millions of dollars in checks in restitution. Then the one-time
action movie star listened as a judge sentenced him to 36 months in federal prison. It was a rather
pedestrian end to the highest-profile federal tax-prosecution since Leona Helmsley in the late 1980s.
And what a trial it had been: Snipes attempting to “divorce from” the United States and claiming to be
exempt from tax-laws in a jumbled 600-page set of documents sent to the IRS; co-defendant and veteran
tax-evader Eddie Kahn refusing to leave his cell to attend his own trial, as well as claiming the indictment
was invalid because his name was printed in capital letters on the court documents; a defense lawyer who
himself was barred by a federal court in 1999 from selling tax-denier literature; and revelations of
Snipes’ attempts to submit $14 million in fraudulent “bills of exchange” in lieu of payment for back
taxes. Wesley Snipes’ one-time accountant and a former personal assistant were both called to testify
against the actor, and their testimony painted a picture of a man suckered by fraudsters and his own
greed.
Wesley Snipes would claim to have been singled out for prosecution because he represented a high-profile
target. If the IRS was indeed trying to “send a message”, it was undoubtedly aimed at the [supposedly
growing] ranks of the “tax denial movement.” This movement has gained greater mainstream notoriety
with the growth of the Internet and the rise of presidential candidates like Ron Paul, who ran on a
platform that included eliminating income taxes, and potentially, the IRS itself.
J.J. MacNab is an insurance analyst in Bethesda, Maryland, but in recent years she has earned public
enemy status within the ranks of tax-deniers. The 45-year-old has turned her small hobby of exposing
tax-deniers online into a second career of sorts. She has twice testified before the US Senate, been sourced
by more than fifty publications and even helped draft new legislation seeking to deter “frivolous” tax
claims of the sort common to tax-deniers. She attended the Wesley Snipes trial as part of a new book she
is working on about right-wing fanatics, conspiracy theorists and tax protestors. COOL’EH got in touch
with the indefatigable Ms. MacNab to talk taxes and the lack thereof.
Did you follow/were you involved in the recent trial and conviction of actor Wesley Snipes and several
others involved in a "tax-protest" scheme?
My focus over the years has been on stopping promoters from peddling scams. Mr. Snipes became involved
with at least three such scammers over a ten-year period, including Eddie Kahn, a promoter who had done time
in the 1980s for tax evasion, Douglas Rosile, a disbarred accountant, and a group called the Commonwealth
Trust out of Pennsylvania.
In the first few years of my project, I worked with the IRS and DOJ to identify who the key promoters were in
the movement. Some were prosecuted. Others were shut down by civil injunction. All three of Snipes’
advisors were on my list from the beginning. I didn’t know Snipes was a tax protester, however, until his name
came up in a criminal trial in Pennsylvania involving the Commonwealth Trust company. Considering that the
tax denier movement was started by the white supremacist movement, Snipes’ participation in the group came
as a bit of a surprise.
I attended the Snipes trial as research for a book on right wing extremists.
What did you think of the outcome of the Snipes trial?
At his criminal trial, Snipes chose not to put up any defense whatsoever. He offered no witnesses, didn’t take
the witness stand himself, and never told the jury his side of the story. When the jury only convicted him on
three counts of willfully failing to file tax returns, I was surprised that the jury wasn’t harder on him. As for the
three-year sentence, that was a fairly standard prison term based on the federal sentencing guidelines formula.
How did you become involved with the IRS in the whole tax-protestor movement, and then testifying
before the Senate Finance Committee?
It started as a hobby. I’m self-employed and my work as an analyst gets a little dull at times, so over the years,
I’ve taken on various long-term, volunteer projects. My first project, for example, involved working to shut
down an industry that was scamming young men dying of AIDS in the early 1990s. The scammers knew that
their victims wouldn’t live long enough to sue or press charges so they were aggressively peddling their scheme
without worrying about getting caught. This pissed me off, so I worked with the press to get the story out, with
state legislators to change the laws to better protect the victims, and with law enforcement to identify and
prosecute the worst offenders. It was a time consuming task – it took years to accomplish –
but the results were immensely satisfying.
In 1997, I bumped into a pair of con artists peddling tax scams to gullible victims at senior centers and on the
Internet. The scams were heavy on right-wing political rhetoric and light on legal reality. An 83 year old client
of mine had purchased a tax package from them that also turned out to be a Ponzi scheme and he was both
financially wiped out and facing the full wrath of the IRS. I went online and found hundreds of such scammers
successfully selling anti-tax packages by wrapping them in “pro liberty” quotes and founding father ideals.
I contacted the IRS with the scam materials from my client, but three years later, they’d done nothing to stop the
bad guys. This pissed me off, so I started a new project, and worked with various members of the press to bring
attention to the tax denier movement which by then was growing in leaps and bounds as a result of the internet
and the IRS’ inactivity. Senators Baucus and Grassley from the Senate Finance Committee read the stories in
Forbes and the New York Times, they called a hearing, and I was asked to assemble a panel of experts on the
issue.
My project grew. Ten years later, I had built up a network of more than 200 law enforcement contacts from
seventeen government agencies, trying to focus their attention on the biggest scam promoters within the
movement. I figured that if the scam promoters were arrested and prosecuted, the followers would realize that
they’d been scammed and move on to less self-destructive endeavors. The Senate Finance Committee invited
me back in 2004 to testify on charity schemes, and in 2006, they asked me to submit a written update to my
prior tax denier testimony.
What is your general opinion of the movement and its ideas and proponents?
I spend a considerable amount of time in the company of right wing extremists, both online and in person, and I
find them to be an odd mix of fascinating, humorous, and in some cases, kind of creepy. On one hand, I admire
their passion and determination. On the other, they believe in some wildly silly and strange theories, which
make them appear clownish and obtuse. There’s also a hard-core violent element that worries me and scares the
bejeezus out of law enforcement. Timothy McVeigh was a tax protester, after all, and anger among the
movement is so pronounced right now that another such significant domestic terrorism act could happen at any
time.
What I find most interesting about tax deniers is that they fervently and honestly believe that what they are
doing is honorable and heroic. Even the worst scammers peddling the most obviously comical schemes have
convinced themselves and their marks that they are the good guys and that the rest of us are just too stupid to
see The Truth.
There are too many of them for their behavior to be blamed on delusional thinking or a mental illness, and they
are growing too fast to be dismissed as a bunch of harmless kooks. They are real, complex human beings with
family, social, and economic pressures, just like the rest of us. Most of them have experienced a significant
financial failure in recent years, and they are very, very angry about that failure and are looking for an external
villain to blame for their problems in life. The government is an obvious scapegoat. Since the only regular
contact that most Americans have with the Federal government is the withholding on their paychecks, and since
most right wing tax deniers are struggling financially, protesting taxes solves two problems. They get to stick it
to the man by withholding funds, while boosting their own financial bottom line.
Tax protesters tend to be angry, paranoid, and frustrated by their lack of political power and success, but not
everyone who is financially struggling and angry ends up being a tax denier. Something has to turn off a
common sense switch. Once that switch is flipped, there’s no limit to what they’ll believe as long as the idea or
product is wrapped in the appropriate right wing rhetoric. In addition to tax scams, the typical protester falls for
get rich quick schemes, debt elimination scams, and medical quackery.
The life cycle of a tax denier is pretty gloomy. Most protesters fall into the movement by purchasing a detax
package from a promoter, who tells them that he holds the secret knowledge that will allow them to keep their
money from the federal and state governments forever, with no adverse consequences. Once they implement
the advice, it takes the IRS about two years to start sending letters. By that time, the protester is deep inside the
cult mentality, and is probably recruiting others to the cause. By the fourth year, the IRS starts to get nasty, and
the protester’s wages are garnished or assets are seized. It’s usually at about this time that the spouse takes the
kids and runs. By this point, the protester is in so deep that he feels like a martyr sacrificing himself for the
good of the country, when in reality, he’s just a guy who fell for a stupid scam and can’t admit it.
And finally, politically, I believe that right wing protesters are like canaries in a coalmine. Those with the most
extreme belief systems don’t make it out of the mine. They go to prison for tax evasion. They allow their anger
to boil over into violence. They commit suicide. Those with less extreme views survive, and the movement
grows much faster once the more extreme members are weeded out.
There have been claims made, in the course of my research for this piece, that you were involved in
drafting tax-related legislation recently adopted into law? Could you shed any light on your role, or lack
thereof, as the case may be?
When I take on a new project, my goal is to stop or at least slow down a group that is harming consumers. I do
this by working with legislators to target key issues, assisting law enforcement with identifying who the worst
offenders are, and pitching stories to the press to encourage legislators and law enforcement to move a little
faster.
As a result of my projects, I’ve been behind several pieces of legislation at both the state and federal level. For
example, prior to 2007, when a tax protester turned in a Form 1040 with a zero on every line, quoting non-
existent Supreme Court cases and out of context citations, the IRS’ typical response was to label the return as
“frivolous” with no further explanation, and slap a $500 fine on the protester. The protesters generally ignored
this small fine and viewed the IRS’ response as little more than an irritant.
I proposed legislation to the Senate Finance Committee to both increase the frivolous filing penalty to $5,000
while requiring the IRS to publish a detailed list of arguments proven to be frivolous. This was passed into law
in 2007. The typical protester is usually battling three or four years of tax returns at a time, and getting an extra
tax bill for $20,000 for their efforts has caused some of the more rational protesters to rethink their
strategy. Furthermore, by requiring that the IRS keep a published list of failed arguments, people who are on
the fence about joining the movement now have fair warning that the particular scam being pushed by their
promoter has serious consequences.
Do you see any connection between the Tea Party movement and the tax-protest movement?
The early Tea Party efforts date back to the year 2000 and were almost exclusively tax protesters. When the tax
denier movement started to break into the mainstream a few years ago, they merged with a lot of other angry
people who didn’t really share their delusion that the tax laws don’t apply to the average person, but did have
similar paranoid beliefs about such things as the “truth” of who was behind 911, the Obama’s birth certificate,
and other similar conspiracy theories.
When Glenn Beck and the FreedomWorks group started recruiting new members to the cause in stunning
numbers, the tax deniers were at first elated. They thought that the new joiners would naturally welcome their
absurd legal theories. When that didn’t happen, it didn’t take long for the euphoria to vanish, and now there is
significant anger and resentment among the tax deniers that their movement is being co-opted by non-
believers. They had thought their movement was going to flourish; instead it is fading into the shadows of the
considerably less extreme Glenn Beck fans. They’re still protesting with the Beck crowd, but they are
realistically the vocal minority in that crowd.