Spectacular Celebrity Tax Problems

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Nicolas CageIt’s hard for us to conceive of the idea that celebrities have tax trouble. After all, they have plenty of money. Shouldn’t they be able to pay their taxes? Shouldn’t they be able to hire people who make sure they can pay their taxes? The tax brackets shouldn’t trip them up… they’re usually in the highest one!

Celebrities are people, too, and they have some of the same problems and troubles we have. Maybe you forgot to deposit that million dollar check for appearing in that straight to DVD movie? Maybe you forgot the $50,000 royalty check for your show’s syndication last year… eh, we all have those problems. Right? Of course, these troubles tend to happen on a larger scale — just as celebrity wealth is on a scale beyond what most of us will see in our lifetimes.

Here are some of the most surprising celebrities with tax issues:

  • Lionel Ritchie: Reportedly owes $1.1 million in unpaid taxes from 2010. One of the top selling artists of all time with no public history of financial problems owes a seven figure sum to Uncle Sam.
  • Lindsey Vonn: The government claims the Olympic gold medalist owes $1.7 million in unpaid taxes, owed on tournament winnings and lucrative endorsement deals.
  • Pamela Anderson: The Baywatch beauty owed at one point around $1.5 million to the federal government, and more than $500,000 to the state of California for a total bill of $2 million.
  • Annie Leibovitz: Word is that the celebrity photographer owed $2.1 million at one point.
  • Martin Scorsese: The famed director reportedly owes almost $3 million in back taxes.
  • Sinbad: The comedy actor owes more than $8 million, and even had to auction off his home to help pay off some of the debt.
  • Nicolas Cage: After several years of failure to pay taxes, the actor owes more than $13 million to the government. That sum earned him a photo in this article! (it’s not the most egregious but we wanted to cut Wes some slack… he’s been slammed in the news a lot over his tax woes)
  • Wesley Snipes: You can’t avoid Wesley Snipes in any discussion of taxes owed. Reports are that he was in by as much as $17 million — and that doesn’t even include the penalties and interest. He was tried, and his appeal failed. And now he’s serving a three year sentence in prison for misdemeanor failure to file tax returns. He’ll be out in about a year.
  • Joe Francis: At one point, the IRS reportedly filed a more than $29 million tax lien against the notorious Girls Gone Wild founder for filing fraudulent corporate tax returns. He seems to have brought down the amount since the original lien was filed, though, after a plea aggreement.

Of course, many of these celebrities insist that the errors are the fault of accountants. In many cases, celebrities aren’t even in charge of their money management issues. Accountants take care of many financial details, including taxes, for celebrities.

However, even if an accountant is to blame for tax mistakes, the celebrities are still personally responsible for their own taxes. Indeed, every year after my accountant finishes with my taxes, one of the papers I sign essentially says that I take responsibility for the results. While my accounting firm will represent me in the event of an audit, the ultimate responsibility for paying the right amount of taxes rests with me.

When there is a shortfall, it can be comforting to think that it’s someone else’s fault. However, you still have to pay the price for mistakes on your taxes. And, there are penalties and interest to pay as well (the IRS starts charging interest immediately).

As you figure your taxes, remember that you need to pay attention to some of the details. While you might not end up owing millions in back taxes, it can still be difficult to pay what you owe. If you have an accountant prepare your taxes, make sure you look over them to ensure that the numbers seem reasonable.

(Photo: nicogenin)

{ 7 comments, please add your thoughts now! }

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7 Responses to “Spectacular Celebrity Tax Problems”

  1. I’ve always said I’d love to have a million dollar tax problem. It would mean I made more than a million dollars at some point. So far, no luck. All I have is some blogging fun. 🙂

    It’s heartening to see that the IRS focuses on the big fish.

    It seems celebrities often focus on spending the money, rather than investing it. And once it’s gone, it’s gone. If you invest the money, it’s all there, the portion that’s yours and the portion that’s Uncle Sam’s. Then all you do is argue over who gets what.

    But it usually only becomes news when Uncle Sam’s portion got spent on the $900,000 weekend party.

    Or that campaign donation. 🙂

  2. Ray says:

    To be honest I think that IRS fines are a bit ridiculous. I’ve seen many cases where people rack up an exorbitant tax bill, because they failed to fail to do their taxes correctly.

    After getting a CPA to look through their filings and negotiate on behalf of them, I’ve seen settlements for less than half the original amount, even before the CPA takes his cut.

  3. If the tax code was simpler, ie a flat tax above a certain income threshold and absolutely no deductions there would never be a problem like this and we could get rid of all CPAS, tax lawyers, most of the IRS, etc. 🙂

  4. Shirley says:

    NEVER think that you are too important/busy to pay attention to your financial debts, because you aren’t. If you do ignore them, someone else will make sure you make the time, most likely in a very inopportune way.

    Out and out fraud deserves punishment to fit the crime.

  5. Gregg says:

    Aren’t these the same people Obama says want to pay more in taxes???

  6. Louise says:

    I see the next reality TV show – Celebrity tax – and can I tweet from prison?

  7. ace carolla says:

    these “celebrities” are such cheapskate misers

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