What is it with celebrities and the IRS? Seems like every time we turn around, another boldface name has run into trouble with the taxman.
Most recently, Kirstie Alley was hit with a $41,395 bill, including interest and fees, for back taxes on her $1.73 million Florida mansion, but Al Pacino, Snoop Dogg and Forest Whitaker have also recently been in hot water with Uncle Sam.
PHOTO GALLERY: 10 Celebrities Who Ran Into Tax Trouble with the IRS
It is a common belief that the Internal Revenue Service deliberately targets celebrities in order to keep the rest of us in line. (The IRS didn’t respond to a request for comment.) And there may be a few legitimate reasons why celebrities just can’t seem to pay (or even file) their taxes. Surrounded by agents, managers and accountants, celebrities who have made piles of money fast sometimes don’t keep a close enough watch on their handlers. Other celebrity tax “mistakes” are just like the knuckle-headed errors we make — failing to file an extension, mixing up personal and corporate expenses, forgetting to include all sources of income. It may actually be harder for A-listers to figure out what they owe, given the erratic nature of their pay cycles and big windfalls.
Money owed: $1 million plus penalties
Prison sentence: 2-3 years
The rapper and actor pleaded guilty to tax evasion last April in a Newark, N.J., federal court. Admitting that he hadn’t paid tax from earnings in 2004 and 2006, Ja Rule will pay more than $1 million in back taxes and penalties and serve two years in prison. Though the MTV Video Award winner did catch a break: He will be able to serve his federal sentence concurrently with the two years he’ll already be serving in New York for attempted possession of a weapon stemming from a 2007 incident — the same incident that put rapper Lil Wayne in behind bars for nine months.
Money owed: $2.85 million
Prison sentence: None
The Academy-Award winning director made headlines last March when it was revealed that the IRS had a levied a $2.85 million lien against him. And in a plot twist worthy of Casino, the bill was delivered on Valentine’s Day. A spokesman for the director has since said that any monies owed had been paid in full and the matter was now closed. But it isn’t Scorsese’s first run in with the IRS — he’s had a series of big liens since 2002, according to the New York Post. It’s been reported that Scorsese’s tax troubles stem from his relationship with Kenneth Starr, his financial advisor from the nineties until last year, just months before Starr pleaded guilty to a $33 million Ponzi scheme and was sentenced to more than seven years in prison.
Money owed: $16.7 million
Prison sentence: None
Let’s not forget that the country singer, enthusiastic defender of marijuana and friend of President Jimmy Carter, is still the only person to admit to smoking pot in the White House. So his 1990 tax troubles had a distinct counter-cultural rebel vibe. The IRS seized his property claiming he owed $16,700,000 in back taxes. Nelson had settled with Uncle Sam for $6 million but when he couldn’t come up with the money, the Feds sent his possessions (including six houses) to auction. In classic outlaw style, the only asset Nelson sent into hiding was his guitar, Trigger. Nelson also received an undisclosed settlement from the Price Waterhouse accounting firm to settle claims that they’d involved the Farm Aid founder in bad tax shelters.
Money owed: $17 million
Prison sentence: 3 years
On December 9, 2010, Wesley Snipes, the actor best known as the vampire in Blade, reported to the McKean Federal Correctional Institution to serve three years for the failure to file federal taxes for three years. Convicted in 2008, Snipes also owed the government 17 million dollars in back taxes. Even now, Snipes charges he was targeted by the IRS for his celebrity and given a disproportionately long sentence compared to similar convictions.
Money owed: $2 million
Prison sentence: 4 years
50-two million people watched Hatch take home the Survivor’s first million-dollar prize, so it only makes sense that the IRS knew about it. In January of 2006 Hatch was convicted of failing to list his winnings on his tax return and was sentenced to jail and home confinement for more than three years. Yet Hatch, most recently on Celebrity Apprentice, was again busted in 2010 for … failing to file his taxes. Sentenced to nine months, he was released from prison in December.
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