Celebrity Tax Evasion Cases

Is there anyone who doesn’t want to save money on taxes? We would all like to at least try. While it’s not a crime to come up with legitimate strategies to reduce your tax bill or minimize business and personal income taxes, it is against the law to resort to fraud and deception just so you can save on taxes. Those who indulge in such illegal practices could face the risk of significant penalties or even jail time. Even though the IRS audits only a fraction of income tax returns each year, it is simply not worth the risk.

Even celebrities have not been immune to this temptation of trying to pull a fast one on the IRS. Here is how some of these cases ended.

Martha Stewart: She may have been the television celebrity behind that charming smile, a multi-million dollar empire, and the best tips on how to set a Thanksgiving table. But she will be remembered for her high-profile conviction relating to insider trading. Stewart was fined more than $221,000 in back taxes in New York State for her home in the Hamptons.

Wesley Snipes: Actor Wesley Snipes served a three-year sentence in federal prison. He was convicted of tax charges in February 2010. The star of the “Blade” action movies and “White Men Can’t Jump” served time at a federal prison in Pennsylvania. Jurors convicted him of willfully failing to file tax returns over three years.

Nicolas Cage: The Hollywood actor in 2008 paid about $666,000 in back taxes to settle charges by the IRS that he made deductions on his business return that were not appropriate. Apparently, he had deducted personal expenses including meals, gifts, limos, and trips on his private jet. The IRS alleged that for many years the actor improperly deducted personal expenses on his business tax returns filed on behalf of his company Saturn Productions, based in Los Angeles.

Richard Hatch: The star of the reality show, “Survivor,” won $1 million in the very first year of the series. Hatch got a Form 1099-MISC from CBS because his cash award from the show was of course taxable. However, he failed to pay taxes not only on his winnings from “Survivor,” but also from other earnings that he received as a result of his new-found celebrity status. He was prosecuted and convicted in federal court. He was sentenced to prison time and penalties totaling more than $300,000.

Willie Nelson: The singer-songwriter had a lengthy, painful struggle with the IRS in the late 1990s. During this saga, the IRS seized most of Nelson’s property and said he owed them $32 million in back taxes. Nelson negotiated a settlement with the IRS and even created an album in honor of his tryst with the agency: “The IRS Tapes: Who’ll Buy My Memories?” In fact, the album itself was a way to pay down the singer’s tax debt. His career picked up from there as well, and he was eventually able to pay off his tax debt.

Contact a Virginia Tax Lawyer

When you fail to pay taxes, the consequences can be extremely serious. There is a fine line between avoiding taxes in a legal and legitimate manner and resorting to illegal means to save on taxes. These celebrity cases show that it is simply not worth it to fight the IRS or try to cut corners. If you have questions about tax-saving strategies or about how to pay off your tax debt, contact an experienced Virginia tax attorney who can help you.