The world was shocked in 2004 when our precious domestic diva Martha Stewart was sentenced to five months in prison and five months of home confinement before two years of supervised probation for lying about stock sales. Stewart also was fined $300,000—but it doesn’t stop there. Stewart was forced to pay $220,000 in back taxes and penalties to the State of New York for her mansion in the Hamptons. Stewart claimed that she hardly spent time there, so she didn’t think she needed to pay taxes on it.
“Only the Little People Pay Taxes”
Martha Stewart isn’t the only celebrity known to try to evade the IRS. New York hotel tycoon Leona Helmsley was known to say, “We don’t pay taxes. Only the little people pay taxes.” Helmsley received 16 years in prison in 1989 for a wide wariety of tax offenses resulting in several million dollars owed. Apparently the judge had a sense of humor; Helmsley’s prison sentence began on April 15—Tax Day.
I Was “Underground!”
More recently, Lauren Hill has been on the hot seat for skipping out on taxes from 2005 to 2007, failing to file papers for around $1.8 million in earnings. The singer faces counts that each hold a maximum penalty of one year in prison and a fine of $100,000. Hill claims that she has been “underground,” withdrawing to heal and grow away from her formerly toxic environment. “It was necessary to withdraw from society, in order to guarantee the safety and well-being of myself and my family,” the singer wrote on Tumblr. Hill is scheduled for a June 29 court appearance in Newark.
Too Much Money, Too Fast
A quick rise to fame like that of 2003 American Idol winner Ruben Studdard is inspiring—but next time you get rich and famous overnight, you might want to consider hiring a good tax professional to help you file your mega earnings and pay your taxes correctly. Unfortunately, it seems Mr. Studdard neglected to file a claim on his million-dollar recording contract winnings—and possibly on other income as well. The singer ended up owing over $200,000 in back taxes in 2008, and over another $180,000 for the year 2009. Oops.
When Richard Hatch won $1 million on CBS’ ‘Survivor’ in 2000, he apparently was so excited he forgot to pay taxes. According to the Huffington post, in 2006 he was convicted of tax evasion and sentenced to 51 months in prison.
Bad Management
Next time you wish you could afford someone to manage your affairs, just be glad you’re not paying someone to screw your finances up. In 1990, the Internal Revenue Service (IRS) seized most of Willie Nelson’s assets, claiming that he owed $32 million. As it turns out, Nelson’s accountants, Price Waterhouse, had not been paying Nelson’s taxes for years. Nelson’s attorney renegotiated a settlement with the IRS in which he would only pay $6 million. Willie released ‘The IRS Tapes: Who’ll Buy My Memories?‘, an album with all profits headed for the IRS, according to CNN. He sued Price Waterhouse, contending that they put his money in illegal tax shelters. The lawsuit was settled for an undisclosed amount, and Nelson was debt-free by 1993.
J. Lo’s ex-hubby Marc Anthony also blamed bad accounting when he was slapped with $2.5 million in back taxes, having failed to file tax returns from 2000-04.
Overspending Much?
Nicolas Cage was forced to sell of many of his assets, including properties in California, Las Vegas and New Orleans; a 500-year-old Barvarian castle; yachts; and a 67-million-year-old dinosaur skull worth $276,000. Although he blames his former business manager for driving him to financial ruin, the actor’s legendary spending appears to be the primary cause for his tax neglect. Cage claimed in 2010 to have paid at least $70 million in taxes over the course of his career, although he still owed about $14 million to the IRS alone. In February, the actor paid a little over $6 million toward the debt; he still owes remaining back taxes for 2002-04 and 2007.
I Believe I Can… Not Pay My Taxes
Grammy-Award-winning R&B star R. Kelly failed to pay nearly $1.5 million in taxes from 2005-10. The singer also recently foreclosed on a home or two, and was rushed to the hospital with throat pain and had to undergo emergency surgery. Kelly’s 11th studio album was just released.
‘Blade’ star Wesley Snipes was sentenced to three years in prison in 2007 for failing to file tax returns. We imagine he was a little disappointed with the living conditions—hope it was worth not paying up.
Ozzy and Sharon Osbourne owed more than $1.7 million for 2008 and 2009. Their daughter Kelly also reportedly owes $34,000 in back taxes.
Whether you’re addicted to buying ancient castles and dinosaur bones, have a bad accountant, don’t live in your extra house in the Hamptons, won a Grammy, or think you’re too big to pay taxes, the IRS does not discriminate. Even The Blade has to file a tax return.
