Celebrities With Tax Problems

July 27, 2012 — Leave a comment

Our culture has a tendency to get caught up in the failures and faux pas of famous people, specifically high profile celebrities. The news generally embraces these failures because that’s what people want to read and talk about. So when the IRS chases and tracks down tax evaders each year, we generally hear about the popular figures who do not manage their own money, but are legally responsible for their debts. There is a long list of celebrities with tax evasion and tax fraud problems, so let’s begin with Lindsay Lohan.

Lindsay Lohan had an illustrious career as a child actress in films such as Parent Trap, Mean Girls, and Freaky Friday. Outside of the camera, she has quite a scandalous and controversial life involving driving under the influence and violating probations. More recently, she had trouble with the IRS when they sent her a lien for $100,000 because she failed to report part of her income in 2009. Like many busy people, Lohan hired an accountant to handle her finances, so she let the media know the situation will be dealt with immediately.

Lohan is just a small spec of tax evasion that other celebrities have demonstrated. Wesley Snipes failed to pay $17 million to the IRS on his income taxes. This did not include penalties either. Prosecutors claimed he owed more than $38 million in income taxes from 1999 to 2006 along with conspiring to defraud the U.S. government. He was acquitted of conspiring, but he still was guilty of willful failure to file federal income taxes. After unsuccessfully taking the case to the appeals court, Snipes was sentenced to three years in prison.

The list goes on – Nicolas Cage was charged with failing to pay a $14 million tax bill, which he blamed on his accountant. He was also charged with not paying a $600,000 gift tax. Pamela Anderson owed $2 million in income taxes to the IRS and state of California. Annie Liebovitz, famous photographer, owed $2.1 million in back taxes and planned on selling her rights to her photography to pay back the debt. Martha Stewart owed $220,00 to New York in tax debt, however she argued this because she allegedly never spent time in that state.

Before we start criticizing these celebrities, we have to remember a few things. These high profile people often work in different states for different films or projects. This means they have to pay taxes on their income earned in each separate state, resulting in many different state tax returns to file. These celebrities will often hire accountants to take care of their finances because they are too busy with their work. These accountants could be held responsible for some of the wrongdoings towards the U.S. government, however it is the taxpayer’s decision on whether or not file the completed return.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

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