Every year, the United States Internal Revenue Service faces a litany of claims from taxpayers wanting to avoid paying taxes. Occasionally, those claims have merit.

But, as a document called The Truth About Frivolous Tax Arguments demonstrates, a large number have no basis in fact, and may even lead the claimant to a hefty fine and/or prison.

In what may be the single instance of an IRS document being an entertaining read, the piece outlines a long line of tax protester ploys to find the magic loophole that would get them out of having to pay taxes.

Waitresses beware: Tips are taxable. Sure, it’s hard for Johnny Law to deduce exactly what that table of seniors left after their early bird special, but according to the IRS, “All compensation for personal services, no mpayment, must be included in gross income.” This includes goods and gifts, so if that gentleman at the end of the bar does come through on his promise to buy you a small automobile…

According to the document, a large number of tax preparers have been banned from the industry for advising clients wages aren’t considered income, or that only income from foreign sources are defined as income. Said clients would be forgiven for telling those tax preparers their tax preparation fees shouldn’t be considered income either.

Folks claiming they have rejected United States citizenship so they can be state citizens instead are also in for a rough time.

“In April 2005, a federal district court in Georgia permanently barred Jonathan D. Luman blocking him from selling his Tax Buster program that was based on the false theory that customers can avoid paying tax by renouncing their Social Security numbers and becoming sovereign citizens,” says the document.

Luman may not have been altogether too sharp, continuing his tax scheme even after it became apparent he was under IRS investigation. By the time his court case had ended, he had been order to give the IRS the names, addresses, phone numbers, email addresses and social security numbers of all his clients. Helloooo audit.

Glory be to the loophole-searchers, for they provide endless amusement. See ‘federal taxes constitute a taking of property without due process of law.’ Funny thing: The due process of law says that’s bunk.

The theory that taxpayers don’t have to file returns because of the U.S. constitutional right against self-incrimination is a novel effort. Even more novel, the 9th circuit court found that unless you can prove there’s something to incriminate, you can’t claim you would be incriminated.

You can imagine the scene: “I can’t tell you how much I earn because then I’d be exposing the fact that I’m a drugdealer. And here are my drugs to prove it.”

Some smart folks claim the sixteenth amendment of the US constitution, which gives Congress the power to collect taxes, was never properly ratified because Ohio sat that one out, so all taxes are null and void. Slight problem with that one – Ohio did in fact ratify the amendment, and over three quarters of states did likewise, which makes it ratified as all get out.

The prize for the most imaginative claim to get out of paying taxes must go to ‘The Internal Revenue Service is not an agency of the United States.’ These folks claim, because the IRS wasn’t created by an act of Congress, it’s just some company out to fleece the good people. You know, like most Canadian cellphone providers.

The ‘African-Americans can claim special tax credit as reparations for slavery’ theory would make sense if anyone trying to use it seemed to have the slightest belief that it’s real.

The IRS says it’s so sick of this one that anyone trying it on in future will cop a $500 fine, a change that comes in the wake of a case (United States vs Foster) involving a $500,000 tax refund that was erroneously paid by the IRS before someone at the tax office said, “What a second, what ‘black tax credit’ is this guy talking about, exactly?”

Some anti-tax schemes almost seem to be little more than urban legend. Take the ‘taxpayers are entitled to a refund of the Social Security taxed paid over their lifetime’ scheme, in which claimants waive all rights to social security payments in the future, expecting a refund for anything they’ve contributed.

I tried this at my local Blockbuster, telling them I’ve forgotten the plot of every crappy movie I’ve rented from them. Still waiting for a cheque.

This one can be classified under the “but I don’t have kids of school age – why should I have to pay taxes for education?” line: Apparently a large number of Americans claim, since they didn’t purchase fuel for an off-highway business, they can claim the US Fuels Tax credit.

IRS says, ‘Go buy some fuel, smart guy.’

One of the more entertaining aspects of the IRS document on frivolous claims is the list of penalties charged to those who insist on claiming them, even in the face of overwhelming evidence that they’re bunk.

For example, in Madge vs Commissioner, the courts said, “after having warned the taxpayer that continuing with his frivolous arguments – that he was not a taxpayer, that his income was not taxable, and that only foreign income was taxable – would likely result in a penalty, the court imposed the maximum $25,000 penalty.”

Well played, sir.

In Wetzel vs Commission, “the court imposed a $15,000 penalty against Wetzel, a professional tax return preparer, for making frivolous arguments because he knew or should have known the arguments were frivolous.” Translated: “Stop being stupid or we’re going to… oh, heck with it. Eat this, whizkid.”

Occasionally the courts get right to the point when faced with frivolous tax claims, as happened in Davich vs Commissioner, where, “the court imposed a $5,000 penalty against the taxpayer case, stating “it is clear that [the taxpayer] regards this proceeding as nothing but a vehicle to protest the tax laws of this country and to espouse his own misguided views, which we regard as frivolous and groundless.”

The full document can be found at http://www.irs.gov/pub/irs-utl/friv_tax.pdf

Gov. Arnold Schwarzenegger has been cleared of an IRS lien for nearly $80,000.

The governor’s office on Friday released documents showing Schwarzenegger has been cleared of the lien on his personal tax filings.

Spokesman Aaron McLear says a computer glitch on Schwarzenegger’s payroll tax filings in 2004 and 2005 led to the inquiry by the IRS. He said investigators believed Schwarzenegger did not file taxes for his household employees when, in fact, he had.

The governor was not notified until late last year because the IRS had sent mail to his home instead of his office. Due to security precautions, the governor does not receive mail at his home.

Instead of having to pay $79,064, the governor was assessed $20.50 for administrative fees.

A former watch company owner who held offshore accounts at UBS AG pleaded guilty to failing to tell U.S. tax authorities about $10 million in offshore assets.

Jack Barouh, the former owner and president of Tempus International Corp., admitted in federal court in Miami he skimmed money from his company and didn’t report income on $10 million in assets, including about $6 million held at offshore accounts at UBS.

Barouh, of Golden Beach, Florida, is the seventh UBS client to plead guilty to tax crimes since the Zurich-based bank agreed last Feb. 18 to pay $780 million to avoid prosecution for helping wealthy Americans evade taxes.

“Skimming from one’s business and placing the assets in a secret offshore bank account is a classic example of tax evasion,” U.S. Attorney in Miami Jeffrey Sloman said today in a statement.

Barouh set up so-called nominee accounts through Hong Kong, British Virgin Island and Panamanian companies, including one by the name of Domilou SA, according to a document accompanying Barouh’s plea agreement. He also held accounts at banks other than UBS, according to the document.

“Beginning in approximately 1976, the defendant skimmed income from his watch businesses and deposited the proceeds into the UBS bank account in the name of Domilou,” according to the court document.

2004 Fossil Sale

Barouh sold Tempus, which sold watches under the MW and MW Michele brands, to Fossil Inc. for about $50 million in 2004. Barouh would run Tempus after the purchase, Tempus said in a statement when the acquisition was announced. Fossil Chief Financial Officer Mike Kovar didn’t immediately return a message seeking comment.

Two unnamed Swiss money managers helped Barouh manage the offshore accounts, according to the court document. One, identified as Swiss money manager No. 1, “misappropriated” more than $5 million from the Domilou account, the document says.

A Swiss attorney, identified as Swiss attorney No. 1, negotiated a settlement with the first money manager and used that settlement, as well as funds from Domilou, to establish a British Virgin Island corporation called Similen Investments Ltd. for Barouh, the document says.

The attorney and Swiss money manager No. 2 were directors of the company, according to the document.

Starting in 2007, Barouh considered repatriating his accounts to the U.S., according to the court document. The unidentified Swiss attorney instead persuaded Barouh to transfer his assets to a Hong Kong nominee company named Amery Investments Ltd.

Barouh, who faces as many as three years in prison, is scheduled to be sentenced April 16. A U.S. magistrate judge yesterday set bail at $1 million.

The case is U.S. v. Jack Barouh, 10-cr-20034, U.S. District Court, Southern District of Florida (Miami).

While the Internal Revenue Service provides publications about a wide range of topics, there is one publication every taxpayer should have with them when they are preparing their federal tax return. Publication 17, Your Federal Income Tax is available at IRS.gov and contains a wealth of information for individual taxpayers.

Here are the top five things the IRS wants you to know about Publication 17 and how it will come in handy when you prepare your taxes.

1) The online version of Publication 17 contains electronic links that make finding your answer simple.  Both the downloadable PDF and online 2009 Publication 17 have more than 6,000 hyperlinks.

2) Publication 17 features details on recent tax law changes and legislation that can help you save money at tax time. You’ll find lots of helpful information about the American Recovery and Reinvestment Act of 2009, including the Making Work Pay Credit and the First-time Homebuyer Credit.

3) This publication is packed with basic tax-filing information and tips on what income to report and how to report it. Publication 17 also includes information on figuring capital gains and losses, claiming dependents, choosing the standard deduction versus itemizing deductions, and using IRAs to save for retirement.

4) Publication 17 is also available in Spanish.

5) You can get a hard copy of Publication 17 for free. To get a copy, visit IRS.gov or call 800-TAX-FORM (800-829-3676).

A woman who battled the IRS over a tax deduction for the costs of her sex-change operation says she feels like she won a victory for all transgender people.

Rhiannon O’Donnabhain (oh-DON’-oh-vin), who was born a man, sued the Internal Revenue Service in 2007 after the agency rejected a $5,000 deduction for about $25,000 in medical expenses associated with the sex-change surgery, finding it was a cosmetic procedure and not medically necessary.

On Tuesday, the U.S. Tax Court ruled that O’Donnabhain should be allowed to deduct the costs of her treatment for gender-identity disorder, including sex-reassignment surgery and hormone treatments.

”The tax court has spoken for my community and has supported my community by saying that this is a proper medical deduction, much the same as an appendectomy or open heart surgery,” O’Donnabhain said in an interview Wednesday.

”It was a proper medical deduction, and it certainly is not cosmetic surgery as the IRS contended,” she said.

IRS spokeswoman Michelle Eldridge declined to comment on the ruling.

The legal group Gay & Lesbian Advocates & Defenders, which represented O’Donnabhain, said the decision could potentially affect thousands of people a year in the U.S. who undergo similar operations.

Lambda Legal, a national civil rights group for lesbians, gay men, bisexuals and transgender people, called the ruling ”a case of the federal government catching up with medical standards.”

”I think it’s an important decision that could help educate and bring along transgender rights in other areas because it ratifies what the medical community has said clearly for years, which is for people with gender identity disorder, this type of surgery is frequently a medical necessity for their lives and for their health and for their well-being,” said Hayley Gorenberg, deputy legal director at Lambda Legal.

The Tax Court voted 11-5 to grant the deduction.

In a dissenting opinion, Judge David Gustafson said he believes sex reassignment surgery falls within the ”cosmetic surgery” category of the tax code and the expense is therefore not deductible.

Even if such surgery ”is medically indicated … it is an otherwise cosmetic procedure that does not ‘treat’ the mental disease,” Gustafson wrote.

O’Donnabhain said she underwent sex-reassignment surgery at age 57, after a tormented existence as a father, husband, Coast Guardsman and construction worker.

An estimated 1,600 to 2,000 people a year undergo sex-change surgery in the United States, according to the Gay and Lesbian Medical Association.

Mortgage rates rose slightly this week, Freddie Mac says.

Rates on 30-year fixed mortgages rose slightly this week, inching above 5 percent, Freddie Mac said Thursday.

The average rate on a 30-year fixed mortgage was 5.01 percent this week, up from 4.98 percent last week.

Last year at this time, the average rate for a 30-year fixed mortgage was 5.25 percent.

Rates fell to a record low of 4.71 percent set in early December and they’ve been held around 5 percent by a Federal Reserve program to pump $1.25 trillion into mortgage-backed securities to try to keep rates low and make home buying more affordable.

The program is set to end March 31.

Loans can cost consumers hundreds in fees and interest and make only a few days’ difference in when the taxpayer would see the funds.

With tax time around the corner, the California attorney general’s office is warning of the dangers of taking out high-cost tax-refund anticipation loans, sometimes presented as “rapid refunds,” that can cost consumers hundreds of dollars in fees and come with high interest rates.

The refund anticipation loans, often marketed to people who are filing electronically, “push taxpayers to borrow their own money instead of collecting their full refunds,” Atty. Gen. Jerry Brown said Monday.

About 8.4 million taxpayers in the U.S. paid more than $800 million in fees on tax-refund loans in 2008 that could have been avoided, said Jean Ann Fox, director of financial services at the Consumer Federation of America advocacy group.

The loans are short-term and based on the projected amount of a taxpayer’s refund, said Christine Gasparac, an attorney general’s office spokeswoman.

A tax preparer offering this kind of loan will sometimes roll in the cost of tax preparation and other fees, including those that might be assessed for administrative, e-filing or processing costs, so there will be no out-of-pocket expense upfront to the client.

This can be especially attractive to people with low incomes.

“Many people don’t realize how much this will cost them in the end,” Fox said.

The consumers would get their refund relatively quickly anyway, the consumer advocate said. Electronic returns usually arrive within two weeks.

“There isn’t much of a reason to get a tax-refund anticipation loan,” Fox said.

“Don’t let them talk you into anything else.”

The IRS offers free assistance programs for those who need help filing their tax returns, including the Volunteer Income Tax Assistance Program, which offers help to people who make about $49,000 or less.

There is also the Tax Counseling for the Elderly Program, which provides free help to people 60 and older.

Some taxpayers may also qualify for free federal income-tax preparation through a partnership between the IRS and the Free File Alliance, a group of private-sector tax software companies.

More information on these programs is available at www.irs.gov or by calling (800) 829-1040.

People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.

Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.

“Americans have opened their hearts to help those affected by the Haiti earthquake,” said IRS Commissioner Doug Shulman.” This new law provides an immediate tax benefit for the many taxpayers who have made generous donations.”

Taxpayers can benefit from their donations, almost immediately, by filing their 2009 returns early, filing electronically and choosing direct deposit. Refunds take as few as ten days and can be directly deposited into a savings, checking or brokerage account, or used to purchase Series I U.S. savings bonds.

The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.

To get a tax benefit, taxpayers must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.

Taxpayers should be sure their contributions go to qualified charities. Most organizations eligible to receive tax-deductible donations are listed in a searchable online database available on IRS.gov under Search for Charities. Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov. Donors can find out more about organizations helping Haitian earthquake victims from agencies such as USAID.

The IRS reminds donors that contributions to foreign organizations generally are not deductible. IRS Publication 526, Charitable Contributions, provides information on making contributions to charities.

Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution. Publication 526 has further details on the recordkeeping rules for cash contributions.

This year’s special Haiti relief provision is modeled on a 2005 law that, in the wake of the Dec. 26, 2004, Indian Ocean tsunami, allowed taxpayers to deduct donations they made during January 2005 as if they made the donations in 2004.

An expanded Earned Income Tax Credit (EITC) means larger families will qualify for a larger credit, offering greater relief for people who struggled through difficult financial times last year, the Internal Revenue Service said today.

The IRS and the Treasury Department marked EITC Awareness Day as their partners nationwide worked to highlight the availability of this important tax credit. EITC, which is in its thirty-fifth year, is one of the federal government’s largest benefit programs for working families and individuals. Last year, nearly 24 million people received $50 Billion in benefits. The average credit was more than $2,000.

“As part of the economic recovery efforts, there have been important changes to expand EITC to benefit taxpayers,” said IRS Commissioner Doug Shulman. “Today, more than ever, hard-working individuals and families can use a little extra help. EITC can make the lives of working people a little easier.”

Eligibility for EITC depends on earned income and family size, among other tests. However, single people and childless workers also are eligible, although for smaller amounts. For tax years 2009 and 2010, the American Recovery and Reinvestment Act created a new category for families with three or more children and expanded the maximum benefit for this category.

To qualify for the EITC, earned income and adjusted gross income (AGI) for individuals must each be less than:

• $43,279 ($48,279 married filing jointly) with three or more qualifying children
• $40,295 ($45,295 married filing jointly) with two qualifying children
• $35,463 ($40,463 married filing jointly) with one qualifying child
• $13,440 ($18,440 married filing jointly) with no qualifying children

The maximum credit for tax year 2009 is:

• $5,657 with three or more qualifying children
• $5,028 with two qualifying children
• $3,043 with one qualifying child
• $457 with no qualifying children

The maximum amount of investment income is $3,100 for tax year 2009. For families, there are also certain requirements for child residency and relationship that must be met. Additional eligibility information is available in FS-2010-12 and on the Web at IRS.gov/EITC.

Another new provision adds to the definition of a “qualifying child:” The child must be younger than the person claiming the child unless the child is totally and permanently disabled any time during the year. The child cannot have filed a joint return other than to claim a refund. Also new for 2009, if a qualifying child can be claimed by either a parent or another person, the other person must have an AGI higher than the parent in order to claim the child for EITC purposes.

Historically, one in four eligible taxpayers fails to claim the EITC, which is why the IRS and its free tax preparation partners host an annual EITC Awareness Day. This year, there are 68 news conferences being held around the country. Community coalitions and IRS partners nationwide also are also issuing 128 news releases, writing letters to the editor and using social media tools to spread the word about EITC.

Typically, people who fail to claim the EITC include workers without qualifying children, people whose earned income falls below the threshold required to file a tax return, farmers, rural residents, people with disabilities and nontraditional families such as grandparents raising grandchildren. People must file a tax return to claim the EITC.

Free help is available to EITC-eligible taxpayers. There are nearly 12,000 free tax preparation sites nationwide. People who want to prepare their own tax returns can visit Free File on IRS.gov. This free tax software and free electronic filing program will walk taxpayers through a question and answer format and help them claim the tax credits and deductions for which they are eligible.

EITC-eligible taxpayers also can seek assistance at the 400 IRS Taxpayer Assistance Centers nationwide. To assist EITC taxpayers, 167 IRS assistance centers will offer Saturday service on Jan. 30, Feb. 6 and Feb. 20.

There is an online EITC Assistant also available on IRS.gov which can help taxpayers and tax preparers determine eligibility. And, for tax preparers and IRS partners, there is EITC Central which has links to toolkits that include marketing products.

More than 65 percent of EITC returns are prepared by a third party. The IRS urges taxpayers to choose a reputable tax preparer to avoid problems that come with an inaccurate tax return. The agency also urges tax preparers to follow due diligence requirements when preparing an EITC tax return. More information is available at irs.gov/eitc.

Nearly 12,000 free tax preparation sites will be open nationwide this year as the Internal Revenue Service continues to expand its partnerships with nonprofit and community organizations performing vital tax preparation services for low-income and elderly taxpayers.

The IRS Volunteer Income Tax Assistance (VITA) Program offers free tax help to people who earn less than $49,000. The Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older.

Today, partners and local officials will be hosting news conferences or issuing news releases nationwide to highlight the Earned Income Tax Credit (EITC) and their free tax preparation programs. The EITC is already the government’s largest cash assistance program targeted to low-income Americans. However, not all eligible taxpayers may be aware or claim the EITC.

Taxpayers need to bring to the VITA/TCE sites the following items:

• Photo identification
• Valid Social Security cards for the taxpayer, spouse and dependents
• Birth dates for primary, secondary and dependents on the tax return
• Current year’s tax package, if received
• Wage and earning statement(s) Form W-2, W-2G, 1099-R, from all employers
• Interest and dividend statements from banks (Forms 1099)
• A copy of last year’s federal and state returns, if available
• Bank routing numbers and account numbers for direct deposit
• Other relevant information about income and expenses
• Total paid for day care
• Day care provider’s identifying number

To file taxes electronically on a Married Filing Jointly tax return, both spouses must be present to sign the required forms.

Trained community volunteers can help eligible taxpayers with all special credits, such as the EITC, Child Tax Credit or Credit for the Elderly. Also, many sites have language specialists to assist people with limited English skills.

In addition to free tax return preparation assistance, most sites use free electronic filing. Individuals taking advantage of the e-file program will receive their refunds in half the time compared to returns filed on paper. Taxpayers who use e-file and direct deposit can receive their refund in as few as 10 days. This year, taxpayers also can use the refunds to purchase U.S. Savings Bonds.

Taxpayers who file electronically also can opt to file now and pay later. If taxpayers owe, they can make a payment April 15 by authorizing an electronic funds withdrawal (direct debit) from a checking or savings account, paying by credit (Discover Card, American Express, MasterCard or VISA Card), or by check or money order (made out to the United States Treasury) using Form 1040-V, Payment Voucher.
As part of the IRS-sponsored TCE Program, AARP offers the Tax-Aide counseling program at nearly 7,000 sites nationwide during the filing season. Trained and certified AARP Tax-Aide volunteer counselors help people of low-to-middle income with special attention to people age 60 and older. To locate the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP’s Internet site.

The military also partners with the IRS to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council (AFTC) consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. The AFTC oversees the operation of the military tax programs worldwide, and serves as the main conduit for outreach by the IRS to military personnel and their families. Volunteers are trained and equipped to address military specific tax issues, such as combat zone tax benefits and the effect of the EITC guidelines.

For taxpayers who want to prepare and e-file their own tax returns, there is IRS Free File. This is a free service offered by approximately 20 companies who make their software available for free. Taxpayers with incomes of less than $57,000 are eligible to use Traditional Free File, which is the easy-to-use, interview-style software. For people with incomes of more than $57,000 or people who need little assistance, there is Free File Fillable Forms. For either service, taxpayers must go through irs.gov/freefile to access the programs.

EITC-eligible taxpayers also can seek free assistance at the 400 IRS Taxpayer Assistance Centers nationwide. To assist EITC taxpayers, 167 IRS TACs will offer Saturday service on Jan. 30, Feb. 6 and Feb. 20.

The Internal Revenue Service announced today that some taxpayers who file paper income tax returns will send them to different processing centers this year.

Taxpayers in Maine, Maryland, Massachusetts, New Hampshire, Vermont, Virginia and the District of Columbia will now send their tax returns to the IRS Kansas City Service Center in Kansas City, Mo. Taxpayers in Indiana and Michigan will send their tax returns to the IRS Fresno Service Center, in Fresno, Calif. Taxpayers in Alabama will send their tax returns to the IRS Austin Service Center in Austin, Texas.

The IRS continuously monitors work flow at its centers and makes appropriate adjustments by altering the volume of returns to be sent to each. Taxpayers who use the envelope provided with the income tax instructions do not have to be concerned with the address change; their returns automatically will go to the correct center.

Taxpayers who e-file will not be affected by the address changes. Two out of three filers choose IRS e-file; it’s faster, easier, more accurate and more convenient than filing a paper tax return.

For taxpayers who file paper returns, the correct center addresses are on labels inside the tax packages they receive in the mail. Taxpayers who do not receive a package and need the service center address should refer to the back cover of the instructions to Form 1040, Form 1040A and Form 1040EZ.

Federal agents have arrested a fugitive employee of a company that prosecutors say helped Wesley Snipes and dozens of other clients dodge more than $1.1 billion in taxes, ending a two-month search, officials said Thursday.

Stephen C. Hunter was arrested at his son’s home in Columbus, Ga. on Tuesday, two months after he skipped a November court date to face federal charges that he conspired to defraud the government, said U.S. Marshals spokesman Daniel Winfield.

Hunter worked in the research department of American Rights Litigators, a company that purported to help members legally avoid paying taxes by selling “tax defiance schemes,” according to federal prosecutors. A telephone call to Ed Sussman, who is listed as Hunter’s attorney, was not immediately returned.

The 2008 trial against Snipes, the star of the “Blade” trilogy, helped illuminate the company’s strategy, which prosecutors said was aimed at interfering with the IRS. Snipes got involved in 2000 after meeting Eddie Ray Kahn, the company’s founder, and he soon stopped filing tax returns, prosecutors said.

Snipes, who was a dues-paying member of the organization, was sentenced to three years in prison in April 2008 after he was convicted of three counts of willfully failing to file returns for three years, in which the government said he owed $2.7 million. Snipes asked a federal appeals panel in November to review the “unreasonable” sentence.

Kahn and Douglas P. Rosile, who prepared Snipes’ taxes, were both convicted the same year on felony tax charges. Kahn was sentenced to the maximum 10 years and Rosile received 4 1/2 years.

The cases against Hunter and several other employees are still pending, though, and federal authorities in Washington issued an arrest warrant for him in November after he failed to appear in court. U.S. Marshals were ordered to apprehend Hunter, who they said had claimed he would not be taken alive.

Investigators were tipped this month that Hunter was fleeing the Ocala, Fla. area and could be headed for Columbus, said Winfield. A team surrounded his son’s house around 3:30 p.m. Tuesday and ordered him to give himself up, said Winfield.

“He stood in the window and dared us to come get him — and we did,” said Winfield. “He went without a fight.”

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