Think tax evasion is a poor's man's game? Think again. Convictions range from middle class Joes all the way up to top celebrities like Nicolas Cage, Annie Leibovitz and Marc Anthony. Here's a look at 10 high-profile celebrity tax evasion cases and the lessons they offer.
1. Martha Stewart: She may be a home and garden guru, but she's also a convicted tax evader. Before doing jail time for insider trading, Stewart was forced to pay $220,000 in back taxes and penalties to the State of New York, learning the hard way that East Hampton mansions also generate taxes. Her claim that she hardly spent time there didn't reduce her burden, or appease the state of New York.
2. Wesley Snipes: You know him as Blade, but the IRS knows him as a tax evader that used various means to hide a lofty income. Snipes was found guilty on three counts of failing to file a federal income tax return, owing the government $17 million in back taxes plus penalties and interest. His attempt to pay off a portion of what he owed during his trial to avoid the slammer, failed and in 2008, Snipes was sentenced to three years in prison. He began serving his sentence in December 2010.
3. Willie Nelson: After seizing most of his assets in 1990, the federal government forced Willie to pay over $16 million in back taxes and fines for his involvement with a bogus tax shelter, offering new meaning to the singer's top-ten hit from 1975, “Blue Eyes Crying in the Rain.” Offering a note of redemption for the famous crooner, it was later discovered that Price Waterhouse had not paid Nelson's taxes for years and invested the funds instead.
4. Nicolas Cage: Cage inspired humor in “Raising Arizona” and sobriety in “Leaving Las Vegas,” but only irony when the star of “National Treasure” contributed to the national debt to the tune of approximately $6 million, according to the IRS' 2009 charge. Accusing his ex-manager and accountant of making poor investment choices in risky real estate and failing to pay his taxes, Cage set out to make good with the IRS, but still paid considerable fines on the taxes. Be careful whom you trust with tax advice.
5. Marc Anthony: He may be the husband of superstar Jennifer Lopez, but fame didn't remove his obligation to pay taxes. In 2007, the IRS served Anthony with $2.5 million in back tax bills. Then in 2010, he received two additional bills totaling over $3 million for unpaid taxes on real estate. Marc Anthony blames management, but few empathize after the IRS claimed numerous years of zero tax payments.
6. Annie Leibovitz: It was December 8, 1980 when celeb portrait photographer Leibovitz captured John Lennon and Yoko Ono for the cover of Rolling Stone. Since then, her notoriety rocketed almost as fast as her spending. After years of extravagance and poor financial management, it seems paying taxes was just one expense she couldn't afford. Picture this: in 2009 Leibovitz owed $2.1 million in unpaid taxes for 2004-2007 and was forced to pledge the copyright to every photograph she has ever taken, or ever will, to get the loan she needed to pay her debts.
7. Darryl Strawberry: Mets or Yankees? Strawberry led them both to World Series titles, but like Pete Rose, he stumbled when it came to claiming taxable income. Both can likely recite their stats for every season played, but neither was very good at recalling income from autograph and memorabilia shows. After years of signing away without paying taxes, both received tax evasion convictions. The lesson? If you earn money from it, so should Uncle Sam.
8. Boris Becker: Christened “Boom-Boom” thanks to an impressive serve, the 90s tennis star impressed men and women alike with his talent, but the German tax authority? Not so much. Claiming to be living in the tax haven of Monaco from 1991 to1993, Becker was actually at home in Munich with his wife and kids. When the final ball dropped, Becker paid approximately $3 million in back taxes and interest on earnings from prize money, endorsements and appearance fees.
9. “Survivor” Richard Hatch: He survived the first season of Survivor, winning $1 million. But when it came time to paying his taxes, he stayed on the island and voted CBS off, claiming the network agreed to pay his taxes. In 2006, Hatch was found guilty of tax evasion and served part of a six-year prison sentence as a result. Then in March 2011, he returned for his third prison term for failing to file amended returns. Celebrity tax lesson: Don't “forget” to pay taxes on your income…especially before 51 million television viewers.
10. Heidi Fleiss: Known as the "Hollywood madam," Heidi Fleiss was sentenced in 1997 on tax evasion charges in connection with her high-profile prostitution ring. She served part of her seven-year sentence in prison and a halfway house. Her excuse? Apparently it's a bit challenging to pay legal taxes on illegal earnings.
While some celebrities engage in various attempts to avoid paying taxes, from filing false returns to hiding money overseas, regardless of the method or fame of the individual, the government can force those guilty of tax fraud to pay back taxes and penalties, and serve time in confinement—a costly lesson for an avoidable mistake.
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