When Americans hear about those who are charged with or convicted of tax crimes, they typically think of a stereotypical criminal who has been running some sort of large criminal enterprise that has garnered the attention of federal authorities. But in reality, that couldn’t be further from accurate. Everyday folks receive the attention of the IRS, Department of Justice, and state taxing authorities when they engage in conduct that is questionable. An even larger segment of the citizenry likely have the perception that celebrities are able to escape criminal consequences when they are suspected or even convicted of commuting a crime. Although that may be true with regard to certain offenses, it is not the case in the realm of criminal taxation. This posting is dedicated to showcasing some of the tax woes of well-known celebrities in an effort to show that being investigated for a potential criminal tax offense is serious, that not even the elite of the entertainment industry can escape the grasp of the federal justice system, and that an experienced criminal tax attorney should be contacted at the first sign of an audit or an investigation.
Nicholas Cage
The actor from The Family Man and The Rock found himself in a tough position with the IRS in 2008 after it was determined that he owed more than $13.3 million in unpaid taxes stemming back to 2002. Cage claimed (like many celebrities do) that the underpayment was the result in poor management staff. According to news sources, Cage had a lien placed on his real estate holdings in 2008 and had begun repaying the federal and state tax debt. Although he was not charged with a crime, he was subject to one of the more common tactics by the IRS: a lien. An experienced tax attorney can work with you and the IRS in order to have a lien that was placed on your property or levy placed on your bank account removed.
Leona Helmsley
Known for her superstar status in the hotel industry, Leona Helmsley was sentenced to serve four years in a federal prison in the late 1980’s. A criminal tax investigation uncovered her efforts to evade over $1.2 million in taxes. Helmsley served 21 months of her sentence and was ordered to complete extensive community service. She was hauled back into court after the supervising judge found that she had ordered some of her employees to complete community service hours on her behalf. The judge tacked on an additional 150 hours to her sentence.
Willie Nelson
The famed country singer found himself with a $32 million tax bill in 1990 that had accumulated over several years. When he didn’t have enough to pay, the IRS seized nearly all of his assets, leaving him with nearly nothing and an additional $15 million to pay. The IRS wasn’t happy with what they had recovered, so they reached an agreement with Nelson to write and record the album entitled “Who’ll Buy My Memories? (The I.R.S. Tapes)”, the profits of which would go to the IRS. By 1993, Willie Nelson had successfully sold enough albums to abrogate his IRS tax debt. Much like Nicholas Cage, Nelson was not charged with a crime, but it is evident that the IRS will not stop until the taxpayer’s tax bill is paid in full.
Pete Rose
Disgraced baseball player Pete Rose was convicted of tax evasion and sentenced to serve a term in federal prison in 1990. Rose received more than $350,000 in proceeds from the sale of baseball memorabilia and autograph signings. As one could guess, Rose did not report that income to the IRS and because of his transgression, spent five months in prison and spent an additional three months in a halfway house.
It appears that Rose didn’t learn his lesson as in 2004, a tax lien was placed on his property for nearly $1 million in unpaid back taxes. Although he eventually paid his tax bill to have the lien removed, he was yet again struck with a lien for an unpaid tax bill in 2009 and 2010 for over $120,000.
Wesley Snipes
One of the well-known tax evasion cases involving a celebrity was the plight of Wesley Snipes in 2008. From 1997 to 2001, the actor was convicted of failing to file a tax return. The government estimates that Snipes owed them over $7 million in back taxes. Additionally, Snipes was sentenced to serve a three year sentence in a federal prison in Pennsylvania.
H. Ty Warner
The creator of Beanie Babies, a toy phenomenon in the 1990’s, was convicted of evading the payment of nearly $25 million dollars. He was forced to pay a civil penalty of over $53 million and an additional $14 million of back-taxes and interest. Although prosecutors were persistent in their attempt to have Warner sentenced to time in prison, his legal team was able to avoid that result.
As you can see, even celebrities are not only subject to tax law, they are harshly punished when they break it. Many of those who were able to avoid federal prison time were able to do so because of their experienced legal teams. If you are someone you know is the subject of an audit, investigation, or tax litigation, the help of an experienced tax attorney is invaluable. Although tax preparers and accountants have knowledge of tax and accounting concepts, only attorneys are trained in constitutional law and criminal tax procedure.
The tax and accounting professionals at the Tax Law Offices of David W. Klasing have experience in assisting taxpayers in various tax situations. Whether you have received notice of an audit, or you are the subject of an IRS or state tax investigation, our team of zealous advocates can ensure that you are in the best position to escape from the situation unscathed. Many of those who are audited believe that they have the ability to talk their way out of the situation but end up getting caught up in lies or giving up too much information that can be used against them later. A tax attorney will ensure that you only answer the questions that you need to and that your constitutional rights remain protected. When the federal or government sends their best, ensure that you have a solid team of tax and accounting professionals to meet them. Contact the Tax Law Offices of David W. Klasing today for a reduced-rate consultation.
