Every day, taxpayers get into trouble with the IRS. Some have violated the Federal Income Tax laws, some are “unjustly accused” and others are merely misunderstood. We rarely hear about them. However, we often hear about the famous and infamous. Here are just some of those people.

 

Scarface:

It is not possible to discuss infamous taxpayers without starting with the original, Al Capone. Scarface had been hunted for violating many laws without success. He was finally sent to jail for failing to pay Federal Income Taxes. I guess the Court did not believe him when he claimed on his Return that he was a “Secondhand Furniture Dealer”.

 

Who’s On First, What’s on Second:

Bud Abbott and Lou Costello had a run in with the IRS in 1956 and were forced to sell most of their assets to pay up.

 

Where’s Toto:

Judy Garland failed to pay her taxes for several years and had her home repossessed.

 

Survivor:

Richard Hatch, the first winner of the television show “Survivor” failed to pay taxes on his $1 million prize and was sentenced to over 4 years in jail. Did he think that the IRS would not know that he won the prize?

 

Original 1 Percenter:

Leona Helmsley was convicted of tax fraud and spent 4 years in jail. During her trial, a witness testified saying that Leona once said “We don’t pay taxes. Only the little people pay taxes.” Although her trial took place in 1992, a similar claim seems to have come up again in recent years, this time by the 99% comprising the “little people” instead of the 1% comprising the very wealthy.

 

Ghost Payer:

Nicolas Cage, of recent “Ghost Rider” fame, was accused of not paying his Federal Income Tax and has paid over $6 in back taxes.

 

Tax “Fugee”tives:

Lauryn Hill and Wyclef Jean are musical performers, and former members of the group called the “Fugees”. Both have some Federal Income Tax problems.

In 2010, the IRS reportedly filed Federal Income Tax liens totaling over $2 million against Wyclef Jean’s assets relating to his 2006, 2007 and 2008 Federal Income Tax

Returns. If you are not familiar with Wyclef Jean as a Hip-Hop musical performer you may have heard about him right after the earthquake disaster several years ago in Haiti.

Wyclef, a native of Haiti, ran for president of Haiti but was declared to be ineligible.

Lauryn Hill is an 8 time Grammy Award winning singer. It was recently reported that Lauryn was charged with 3 criminal counts of willfully failing to file Federal Income Tax Returns for 2005, 2006 and 2007. The IRS alleges that she earned $1.6 million during these 3 years. She is scheduled to appear in court on June 29, 2012. Lauryn posted a response on the internet saying that she had not paid taxes because she withdrew from society to guarantee the safety and well-being of herself and her family.

 

White Men Can’t Jump Bail:

Actor, Wesley Snipes, known for his portrayals in Blade, White Men Can’t Jump, Demolition Man and U.S. Marshals went to Federal Prison for failing to file Federal Tax Returns. He was convicted on 3 misdemeanors and only narrowly escaped being convicted on a list of felonies.

Mr. Snipes failed to file Federal Income Tax Returns for the tax years of 1999 through 2004 despite taking in $38 million from his services as an actor. However, he did not stop there. He also filed amended Returns for 1996 and 1997 claiming that he erred in declaring his “wages” as being income and demanded roughly $7 million in refunds.

Among Mr. Snipes’ legal arguments was that what he earned was “wages” but that wages were not defined in IRC Section 861 as being “taxable income”. Mr. Snipes claimed that IRC Section 861 describes income from the performance of services as being taxable but does not actually use the word “wages”.

Few could argue with a straight face that income from the performance of services does not include income called “wages”. Even if they could, how do they claim that “wages” are not among the items included in the broad definition of “…gross income means all income from whatever source derived,…”. Finally, the words “…including (but not limited to) the following items:” means that items on the list are examples rather than the entire universe of income categories.

Mr. Snipes was not done yet, he went on to claim that he was a non-resident alien and, as such was not subject to the U.S. Income Tax laws. Of course, Mr. Snipes was born in the U.S. and was a U.S. Citizen despite his claim that he had renounced his citizenship. Even if that were not the case, working and living in the U.S. alone may have subjected him to Federal Income tax even if he were not a U.S. Citizen.

 

E Tu, Brute:

S. Treasury Secretary Timothy Geithner admitted that he made a mistake by failing to pay payroll taxes on income that he earned from the International Monetary Fund….for 4 years. He claimed that it was a “careless” mistake and paid $34,000.

 

 

6/2012

Copyright ©, Keith B. Baker – 2012

This article is designed to be a public resource of general information. It does not constitute “legal advice” nor does it create a “client-attorney” relationship. While the information is intended to be accurate, this cannot be guaranteed. Tax laws are complex and constantly changing as a result of new laws, regulations, court interpretations and IRS pronouncements. Often, there are also various possible interpretations. Further, the applicable rules can be affected by the facts and circumstances of a particular situation. Because of this, some of the information may no longer be correct or may not apply to all situations. We are not responsible for any consequences or losses resulting from your reliance on such information. You are urged to consult an experienced lawyer concerning your particular factual situation and any specific legal questions you may have.

IRS Circular 230 Disclosure:

Any discussion of federal tax issues in this correspondence may constitute “written tax advice”. Any such advice is limited to the issues specifically addressed, and the conclusions expressed may be affected by additional considerations not addressed herein. Any tax information or written tax advice contained herein (including any attachments) is not intended to be, and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)

You agree not to copy content from our article without permission. Any requests to use our content should be submitted to us by email to [email protected]