Tuesday, September 24th, 2013
Today, I was reminded that it’s been over twenty years since Willie Nelson lost nearly all his possessions to IRS tax liens. Country music news website, The Boot featured an article titled: “23 Years Ago: IRS Places Liens on Willie Nelson’s Property for Back Taxes” that highlights the entertainer’s challenges with the IRS beginning on Sept. 21, 1990, when IRS placed $16.7 million in tax liens on his property. Here is some information the article details about how Nelson and his possessions soon parted:
- Nelson released his ‘Born for Trouble’ album in 1990 with the IRS seizing most of his assets to satisfy his delinquent tax debt.
- Nelson eventually sued his accounting firm, who the article states, had involved his money in an illegal tax shelter causing a downward spiral of IRS penalties and interest when his write-off against that investment was disallowed.
- Nelson’s lawyer was successful in negotiating his IRS debt to $6 million, but Nelson still didn’t have the money to satisfy the tax bill, so the IRS took almost everything he owned for auction.
- Nelson managed to keep his favorite guitar, dubbed Trigger.
- Nelson did lose his Texas ranch to the IRS, but as the article reports, a generous fan purchased the ranch on behalf of a group of farmers who promptly gave it back to him, as a gesture of gratitude for his ongoing Farm Aid support
- Nelson settled his IRS debt for an undisclosed amount, and it was considered cleared by 1993.
Back in 2009, I wrote a post about the singer’s tax woes to comment on the IRS’ determination to collect his taxes specifically the IRS seizure of all his possessions and the fact that all the proceeds from “The IRS Tapes: Who’ll Buy My Memories?” went directly to Uncle Sam to pay off his IRS tax debt.
I bring up Nelson’s story to reiterate that the rich and famous are not immune to tax problems. In fact, they are often vulnerable to tax troubles due to the fact that many entrust their financial matters to business professionals who sometimes take advantage of them and use their wealth and status for their own personal gain. But as demonstrated in Willie Nelson’s case, the IRS could care less if “advisors” caused tax debt issues. They hold taxpayers personally responsible for their own taxes – the IRS does not roll out the red carpet for anyone, let alone a non-compliant celebrity.
Friday, September 6th, 2013
On this short holiday week, the tax news we featured mainly centered on celebrity tax stories. Here is a recap of what we featured:
Tax Problems-Michael Jackson Estate Gets Assessed by IRS – It appears that the estate of the late Michael Jackson and the IRS are engaged in a dispute over how much the estate of the “King of Pop” is really worth. An NBC News Business article titled: “What’s Michael Jackson’s image worth? A $434 million question for the IRS“ reports on the difficulty the two sides are having placing a dollar amount on the image of a celebrity. As it stands, the estate alleges total worth to be around $2,200 while the IRS insists $434 million is more like it. According to tax law specialist Alex Raskolnikov of Columbia University, estates often undervalue their assets because the amount of tax an estate pays is based on that value. He also said that estates the size of Jackson’s usually bring in experts to value the assets. However, if the Jackson estate case does not settle with the IRS, Raskolnikov believes both sides will hire expert panels and who inevitably will have differing valuations. One thing is pretty certain; this case will drag on for a while.
In the IRS is Going After Your Friends and Neighbors Too post, I wanted to dispel the myth that it’s not just celebrities, industry big wigs or scammers who are going to prison on tax charges. In reality, its everyday people including your friends, neighbors – people like you who are actually facing tax problems with the IRS.
Sure, the taxing authorities like the IRS enjoy making an example of well-known celebrities who aren’t paying their share to the IRS. These cases make headlines because the defendants are often household names. Here are three good examples of celebrity tax stories that have made the headlines:
- Nicolas Cage, who had several tax liens placed on his assets for owing $6 million in back taxes.
- Wesley Snipes, who went to prison for three years for failure to file and pay his taxes.
- Marc Anthony, who owed IRS back taxes to the tune of $3 million.
But for every celebrity case you hear about, there are hundreds, if not thousands of Average Joe’s with similar stories who are facing steep fines or lengthy prison sentences for their tax issues.
Good News Celebrity Tax Relief Story – Michael Madsen pays off $640k in Tax Liens – Here is a rare story of a celebrity facing big IRS tax problems who should be congratulated. According to the celebrity news site TMZ in their article titled: “‘Kill Bill’ Star Michael Madsen Attacks $640k Tax Liens- Deadly Viper Squad Style“ it appears Madsen has paid off $644,543.42 in back taxes for two separate tax liens filed against him in 2008. One of the liens was for 2004 for unpaid taxes ($317,443.95) and the other was for 2006 unpaid taxes amounting to $327,099.47. I’m pretty certain Madsen is relieved the IRS is no longer breathing down his neck.
Have a great weekend!
Thursday, September 5th, 2013
It’s not just celebrities, industry titans and scam artists who are going to prison on tax charges. It’s everyday people — your friends and neighbors, and maybe you too.
When most people think of tax cases that send defendants to prison or result in large fines, they think of the big cases — the celebrities convicted of tax evasion charges for not paying their bills to Uncle Sam.
Actors Nicolas Cage and Wesley Snipes are among them. So is Latin music singer Marc Anthony.
Cage was caught owing $6 million in taxes. Snipes went to prison for trying not to pay what he owed. And Anthony owed more than $3 million in taxes to Uncle Sam.
But the truth is that celebrities represent only a small portion of tax cases that are brought to U.S. courts.
Sure, you hear a lot about these cases because the defendants are big names. But when I meet with clients or discuss tax issues before audiences, I always encourage people to remember that it’s easy to draw false conclusions.
That is, it’s easy to assume the IRS is only going after wealthy celebrities, not Average Joes who are dodging their taxes.
While you hear about Cage, Snipes and Anthony, you don’t hear about the thousands of cases every year involving people who could be use your friends and neighbors.
These are people a lot like you who found themselves on the wrong side of the tax law.
Take Arthur Risser Jr. of Las Vegas, for example. He was a large-engine mechanic who earned more than $300,000 from 2006 to 2008 — but he reported only $54,472 of that income.
For that offense, he faces up to three years in federal prison.
In Tennessee, a lawyer is going to prison for 51 months for evading $1.4 million in taxes over nearly a 20-year period.
From 1985 through 2004, John Oliver Threadgill, 70, of Knoxville, Tennessee, used his law firm’s bank account and payroll account to pay for personal expenditures, opened bank accounts in the names of nominee trusts, and titled his personal residences in the names of nominee trusts.
Money that should have gone to the government in taxes instead went to a $69,000 wedding, a $60,000 country club membership, and a $213,000 property.
Threadgill will now pay handsomely in prison time.
A New York businessman, Thomas Nastasi III, 46, of Mount Kisco, New York, now faces prison time as well for not paying $1.7 million in payroll taxes to the IRS.
There are many more examples, of course.
So remember these cases the next time you think that the IRS only goes after well-heeled celebrities who aren’t paying their share to the IRS.
For every celebrity case you hear about, there are hundreds, if not thousands, of Average Joes who are facing steep fines or lengthy prison sentences for their tax issues.
This article was written by Michael Rozbruch. He is a Certified Tax Resolution Specialist, a member of the American Society of IRS Problem Solvers and a Maryland CPA. You can contact him at 866-477-7762 to obtain a free subscription to his newsletter titled The IRS Times & Inquirer.
Tuesday, September 3rd, 2013
There are ways to value the worth of tangible items like real estate or cars for estate tax purposes. However, placing a dollar amount on the image of a celebrity is a more complicated and disparaging process as the estate of the late Michael Jackson is finding out. An NBC News Business article titled: “What’s Michael Jackson’s image worth? A $434 million question for the IRS“ reports on the giant discrepancy between what the estate of the late “King of Pop” deems the monetary value and what the IRS contends it is.
Here are some of the key points the article covers:
- The late singer’s estate said the taxable value of his image and likeness was $2,105. The IRS disputes this figure saying the value is more like $434 million claiming the estate has undervalued the late “King of Pop’s” assets by hundreds of millions of dollars.
- The estate’s stake in Jackson’s recording assets was valued at $469 million by the IRS, but was not even included in a 2009 estate filing.
- The Internal Revenue Service says that the Michael Jackson estate owes $702 million in federal taxes, plus penalties, according to charges the agency brought in U.S. Tax Court.
- In May, the IRS said that was deficient by $505.1 million, plus penalties of $196.9 million.
- Jackson died on June 25, 2009 leaving his estate to his mother Katherine, his three children and various charities. The estate’s tax return dated June 25, 2009, indicated that his estate was valued at $7 million, for tax purposes.
- According to the article, a spokesperson for the Jackson estate said that not only had the estate paid $100 million in taxes, they dispute the IRS’s appraisals, calling them “speculative and erroneous assumptions unsupported by the facts or law.”
NBC News asked tax law specialist Alex Raskolnikov, a professor at Columbia Law School to shed some light as to how there could be such a large gap between the estate’s value and the IRS’. Rasjkolnikov said its common for estates to “lowball the assets” mostly because the amount of tax an estate has to pay is based on the value of the assets.” He also said that estates as large as Jackson’s usually bring experts in the value the assets. If the Jackson estate case does not settle with the IRS, Raskolnikov believes both sides will hire expert panels and there will be different valuations. This case will most likely be tied up in litigation for a while.
This article is significant because it further proves the IRS’s focus on continuing to go after wealthy Americans to collect the taxes due. In June, I wrote a post about one of the largest estate cases of its kind – the Estate of the late William Davidson. The Davidson estate was suing the IRS for wrongly trying to collect nearly $2 billion in estate tax. The IRS has said the estate was woefully undervalued.
High-profile cases like Jackson’s show that the wealthy are being targeted by the IRS now more than ever with collection efforts focused on those individuals, businesses or estates where it thinks it has the best chance of collecting additional tax dollars. If the IRS goes after the rich and famous with such vigor, imagine what they will do to Average Joe Taxpayer who owes IRS back taxes?
Friday, August 9th, 2013
The tax relief news that sparked our interest this week was quite varied. The stories ranged from tax delinquent New Yorkers losing their driving privileges to another “Real Housewife” star in trouble with Uncle Sam, to avoiding tax relief scams and schemes to Twitter tax news about IRS agency challenges including struggles with efforts to curb identity theft and tax refund fraud.
New York State-Getting Tough on Tax Cheats – The post “New York State Revokes Driver’s License for Tax Debt,” reports that beginning this year, New York state drivers who owe more than $10,000 in state taxes face losing their license until the tax debt is paid. The information was provided in Forbes article by contributor Kelly Phillips Erb who also reported that the crackdown on tax deadbeats reflected a state budget revenue raising measure that lawmakers approved in March of this year. The article also mentions that the NY Tax Department estimates collections will be increased by $26 million this fiscal year alone and collecting about $6 million each year thereafter.
Last week, I reported on another “Real Housewife” Teresa Giudice who was indicted on fraud charges. This week, in Even Real Housewives Get Tax Bills it’s Lynne Curtin’s turn. From Capistrano Beach, California, Curtin is best known for her two season stint on the Real Housewives of Orange County. According to celebrity news website TMZ, the IRS filed a tax lien against Curtin for $32,006.24 – a small amount compared to other celebrities. The point of mentioning Lynne Curtin’s tax woes is to highlight the fact that every year the IRS files 1 million tax liens against taxpayers for back taxes. If you are ignoring your tax troubles, beware: you could be next!
Tax Help Tips-How to Avoid Tax Relief Scams – For fifteen years, I have seen my share of tax scams and schemes. Some of the worst have been from people calling themselves “tax resolution experts” who then prey on vulnerable taxpayers seeking IRS tax relief. But not all tax resolution firms or experts are created equal. After reading a recent article by Fox Business titled: “Don’t Become a Victim of a Tax-Relief Scam,” I felt the need to set the tax resolution record straight for legitimate practitioners. After pointing out the three major tax scams to avoid – I share my thoughts on when taxpayers should hire representation and what to look for in a tax resolution professional.
- An article in @Forbes by Robert W. Wood titled: IRS as Rebellious Teenager caught my eye for its informative and humorous content. Wood explains how the impetuous IRS, like a teenager, has made a mess of things. He also mentions that also like a teenager, we need to coexist. Even with a capable grown up in charge, retired corporate and government official, John Koskinen, the damage of the last few years will take time and huge effort to repair the public’s confidence in the tax system.
- Identity theft and tax refund fraud – are the biggest tax problems facing the IRS. A recent article by CPA Practice Advisor @cpapracadvisor titled: IRS failing in efforts to curb ID theft tax fraud claims that the IRS is having a hard time getting control over these crimes. The article also cited two recent watchdog reports that show the need for the IRS to get better at helping identity theft victims and stop issuing refunds to thieves. Perhaps most disturbing is a Government Accountability Office (GAO) report that says the IRS still doesn’t know the total extent of the fraud.
Enjoy your weekend!
Wednesday, August 7th, 2013
The IRS files 1 million tax liens every year. Is yours on its way?
Unless you’re a fan of bad TV, you’ve likely never heard of her.
She’s Lynne Curtin, a Capistrano Beach, California, woman who’s best known for having spent two seasons on the cast of the reality show Real Housewives of Orange County.
She’s not a huge celebrity. In fact, with so many people on reality TV shows these days, you could even argue that Curtin is an average American.
You’ve read the stories of big-name actors getting tax bills from the IRS in the six and seven figures. I love those stories. And who doesn’t? How the IRS goes after America’s royal family always makes for fun reading.
But Lynne Curtin isn’t a big-name celebrity.
She’s a former reality TV cast member. And she owes the IRS money — in the same way that hundreds of thousands of average Americans do.
According to celebrity news website TMZ, the IRS filed a tax lien against Curtin for $32,006.24.
Sure, that’s a lot of money. But think about this: By Hollywood standards of IRS debt, this is the change between the couch cushions.
Actor Nicolas Cage once owed the IRS $13 million. Now that’s a debt!
But there’s a point to Lynne Curtin’s story. Hers is the typical lien — not Cage’s.
Every year, the IRS files liens against consumers for back taxes in the thousands to the tens of thousands of dollars. These liens are filed against your family, friends, your neighbors, your colleagues.
Ever more vigilant, the IRS is pursuing taxpayers who owe money.
You hear about cases like Cage’s.
Or Lynne Curtin’s.
But you don’t always hear about your neighbor’s.
And if you’re cheating on your taxes or owe a substantial sum to the IRS, you should be worried that you’ll be one of the people hit with tax liens.
Since the beginning of the recession, the IRS has been under greater and greater pressure to increase collections — that is, collect the money it’s already owed — in order to make up for declining tax revenues.
In many ways, the audit and enforcement numbers coming from the IRS should be enough to intimidate taxpayers into full compliance.
Today, the IRS audit rate is 1.11 percent. In other words, 1 of every 100 U.S. taxpayers will be audited.
If you’re a big earner, making more than $10 million per year, you have double the audit risk.
And Lynne Curtin? She’s just one of 1 million U.S. taxpayers who received a lien.
That’s right. In 2010, the most recent year for which data is available, the IRS filed 1 million tax liens.
Think about that.
If you’re in tax trouble, it’s about time to find a way out of it.
Tuesday, July 30th, 2013
Seemingly overnight, Teresa Giudice made a name for herself on the Bravo reality show, Real Housewives of New Jersey. However, it appears her ongoing tax problems may take away the glamor of her celebrity lifestyle and place her behind bars. TMZ reports in an article titled: “Real Housewives’ Stars Facing 50+ Years in Prison for Money Fraud” that Giudice and her husband Joe, have just been slapped with a “laundry list” of criminal charges — from bank fraud to tax evasion that could result in the couple facing more than 50 years in prison and more than $600,000 in fines if found guilty.
Here are some of the details the article mentions from U.S. Attorney Paul J. Fishman’s case against the Guidice’s:
- The 39-count indictment claims that between 2001 through 2008, Teresa and husband Joe massively defrauded the IRS as well as several banks.
- They conspired to illegally obtain mortgages and other loans from multiple banks by intentionally overestimating their incomes in order to get more money.
- They withheld vital information about their net worth from a U.S. bankruptcy trustee after filing for Chapter 7 in 2009 — including Teresa’s true income from the Bravo reality show.
- Regarding tax evasion charges, Joe is accused of failing to file income tax returns for the years 2004-2008, during which he allegedly earned $1 million.
- Included in the 39 charges were conspiracy to commit mail and wire fraud, which can carry a maximum prison sentence of 20 years and bank fraud, which has a maximum sentence of 30 years. The remaining charges carry the possibility of even more prison time.
- Neither Teresa nor Joe has been arrested, but they’re both due in court Tuesday morning in Jersey.
Weighing in on the subject, online women’s blog, Jezebel shared an example of the type of fraud Teresa Giudice committed. According to U.S. Attorney Fishman, in September 2001, Teresa applied for a $121,500 mortgage loan indicating on the application that she was working as an executive assistant. She submitted fake W-2 forms and pay stubs, acting as if they were from her employer, and she and her husband also used false information on bank loan applications.
A Fox News article quotes US Attorney Fishman as saying, “Everyone has an obligation to tell the truth when dealing with the courts, paying their taxes and applying for loans or mortgages. That’s reality.”
Nothing is more “real” than stepped up IRS collection enforcement or which it does not discriminate – it goes after celebrities and average taxpayers equally if they believe them to be cheating or not paying taxes. It’s just when it comes to celebrities, we hear about it.
If you are saddled with significant tax debt, have underreported your income, or are under audit for “less than perfect” tax reporting, you will want to be proactive and come forward to deal with your tax debt issues. Taking this step may actually help your case.
Your first line of defense will be to consult with a certified tax resolution specialist who has experience handling cases like yours. These IRS problem solvers can help to unwind your tax mess, keep you out of prison and get you back on better financial footing.
Friday, July 12th, 2013
The top tax relief news this week ranged from tax evasion, to prison time for a false tax claim, troubles at the IRS, to a giant tax bill for the estate of actor James Gandolfini. Here is a recap of the tax stories we found interesting:
Tax Evasion by Guilty Texas Pharmacist– This post highlighted the story of Grapevine, Texas pharmacist Joseph Moss who was sentenced to one year and a day in federal prison and ordered to pay $51,150 in restitution after pleading guilty to attempting to evade income for tax year 2008.
Some people overstate their income in order to receive a large refund. The post False Tax Claim Gets Man 4 Years in Prison reports on Georgia resident, Donus R. Sroufe who did just that and got caught! Sroufe was tried and found guilty at trial of interfering with the administration of the revenue laws and of making a false claim for a $1.7 million tax refund. For his handiwork, Sroufe received four years in prison after being found guilty.
The IRS is in the hot seat again, this time it’s for publishing tens of thousands of social security numbers online. In IRS Problems-Agency Publishes Social Security Numbers Online, I point out that the IRS is supposed to be preventing identity theft, not encouraging it!
James Gandolfini’s Estate to Pay Tax Man 40 percent – It appears the estate of the late actor James Gandolfini is facing a “tax nightmare.” A New York Daily News article reports that how the estate was set up; his beneficiaries will owe $30 million in taxes (at a 55% tax rate) to Uncle Sam in nine months.
Celebrity Tax Woes continued this week on Twitter.
- The Chicago Tribune reports that former Chicago Bears defensive tackle Chris Zorich is in trouble with the IRS for not filing his federal income tax returns for four years. It also appears he’s broke.
- A Ballerstatus.com article reports that hip-hop mogul Damon Dash was just hit with an IRS tax lien claiming he owes over $2.8 million in unpaid taxes — $2.61 from 2005, and $187,500 from 2011.
Have a great weekend!
Tuesday, July 2nd, 2013
Recent celebrity tax cases demonstrate just how aggressive IRS collections efforts are today.
It’s been hunting season for the Internal Revenue Service.
And tax-collecting agents have some big game in their sights.
Since the first of the year, there’s been story after story of famous, wealthy celebrities running into trouble with the Tax Man.
Most recently, the rapper known as Fat Joe — his real name is Joseph Cartagena — was sentenced to four months in prison for failing to file tax returns on more than $3.3 million in income.
“There was a lot going on in the years that I didn’t file my taxes, but it was my responsibility,” Fat Joe, whose best-known single was “Lean Back,” told the court.
Fat Joe will spend the next few months in a cold, unwelcoming prison cell. But he’s not the only celebrity to be punished for landing on the wrong side of the IRS.
Singer Mary J. Blige, who has sold more than 50 million albums worldwide, is also in trouble with the Tax Man.
She owes $3.4 million in back taxes.
Then there’s Mathew Knowles, a former Xerox salesman who struck gold when he began managing the career of his now-famous daughter — singer Beyonce.
Knowles, who founded Music World Gospel, the largest African-American-owned and -operated gospel label in the world, owes the IRS $1.2 million.
Remember Dean Cain? He’s a bit washed-up these days, but in the late ’90s, Cain was TV’s Superman.
Trouble is, the Tax Man has his Kryptonite.
Cain owes nearly $200,000 in back taxes to the IRS and the state of California.
Don’t worry — this list of celebrity tax troubles just keeps going.
It even includes one of the Baldwin brothers, Stephen, the youngest. He’s best-known for his roles in The Usual Suspects and The Flintstones in Viva Rock Vegas. But he’ll need to land another big role to pay the IRS. The actor owes $300,000 in back taxes.
Now, now, let’s not pick on just singers and actors. The IRS goes after well-heeled athletes as well.
Terrell Owens, the charismatic wide receiver who played for a host of NFL team, received an unwanted pass from the IRS. Known by his initials T.O., Owens owes $430,000 in unpaid taxes for the years 2007 and 2009.
Now the six-time Pro Bowler is going to have to find a way to tackle that tax debt.
I know what you’re thinking.
Celebrities in tax troubles always make for fun tabloid reading, but what does this have to do with me?
Here’s the answer I want to leave you with: It has everything to do with you.
The IRS isn’t going after these celebrities because they’re famous. Agents are pursuing these people because they owe money, and perhaps more than ever before, the IRS is singularly focused on collections.
The next person they try to collect from could be you.
Friday, June 28th, 2013
This week was a busy one in tax related news. The stories ranged from celebrity tax woes, collection of billions in tax debt, tax fraud and a new IRS report that outlines improvements to the entire tax-exempt process. Here is a recap of those stories:
Fashion Moguls Dolce & Gabbana Convicted of Tax Evasion – According to a Reuters article, both Domenico Dolce and Stefano Gabbana were given a 20-month suspended prison sentence and required to pay restitution of $10 million euros $13.4 million U.S dollars for hiding hundreds of millions of euros from Italian tax authorities. This case shows how not only the U.S. Government but also global taxing authorities are going after the wealthy to collect back taxes for their struggling economies.
Rapper Fat Joe Goes to Prison on Tax Charges – The Daily Mail Celeb reported that on Monday, 42-year-old rapper Fat Joe (aka Joseph Cartegena) was sentenced to four months in prison and given a $15,000 fine for failing to file and pay taxes on more than $1 million dollars in income for tax years 2007-2008. Back in January, Fat Joe, facing these same charges, pledged to file his tax returns and pay all the taxes and IRS penalties owed. Sadly, it didn’t happen.
A story relating to the tax problems of the rich and famous surrounds the estate of the late billionaire William Davidson and the IRS. The post: Davidson Estate Battles IRS over Massive $1.9 Billion Tax Debt, reports that attorneys for the estate of the late William Davidson are taking the IRS to court claiming the agency is wrongly trying collect about $2 billion in taxes out of the estate. It’s hard to know if the IRS has a case, but given the size of the estate and potential revenue to the government, no doubt it will get tied up in litigation for some time.
Danny Werfel, the IRS Principal Deputy Commissioner, has pledged to restore the IRS’ reputation and image. Just week, the IRS Released Report Outlining Changes for Non-Profits outlining new actions and steps to fix problems with the IRS’ review of tax-exempt applications and to improve the processes and operations that already exist at the IRS. The report highlights three key points of discussion:
- Who was responsible and assurances that this does not happen in the future
Fixing the Problems with the Review of Applications for Tax-Exempt Status
- A new voluntary process to speed the application times, additional staff to help and the suspension of lists that target specific groups.
Review of IRS Operations and Risks
- Establish an Enterprise Risk Management Program and Initiate a comprehensive, agency-wide review of compliance selection criteria
Other tax news stories featured people getting caught for attempting to cheat the tax man.
Tax-Related Offenses Charged to Nonprofit Director in Ohio – Edward G. Kramer, 62, director of a Cleveland nonprofit organization was charged with allegedly avoiding paying taxes on approximately $500,000 in income for the years 2007 through 2010 and not filing a tax return for two other years. Kramer also withheld taxes from employees that he did not pay to the government.
Tax Fraud by Florida Woman Earns Prison Sentence – Plant City, Florida resident, Rhonda Yvette Brooks, was sentenced to three years and six months in federal prison and ordered to forfeit $23,096 on tax fraud and aggravated identity theft charges. Using Turbo Tax, Brooks submitted fraudulent tax returns totaling more than $70,000 in bogus tax refunds.
Friday, June 14th, 2013
The tax stories that peaked our interest this week included the following: new online sales tax law challenged by some states, the differences between Offer in Compromise and Installment Agreement, musician Jack White’s generous tax payment for the Detroit’s Masonic Theater, recordkeeping tips from the IRS and Beyoncé’s father and his massive tax debt. Just in case you missed any posts, here’s a recap:
Internet Tax Law Challenged by Team of Attorneys General The Washington Post reported that this week three attorney’s general in states with no sales tax Montana, Alaska and Oregon sent letters to all 435 U.S. House representatives to persuade them to oppose an Internet tax bill alleging that the measure is unconstitutional and that it would prompt a legal challenges if passed.
Deciding what tax resolution strategy to use takes understanding your current and future financial situation. In the post, IRS Question: Offer in Compromise or Installment Agreement, Which is Right for Me? I explain that each IRS payment plan is offered for different financial situations. I also recommend that consumers who may need an Offer in Compromise or an Installment Agreement first consult a qualified tax professional who can carefully analyze their previous returns and help them determine which IRS tax settlement will be best to get back into tax compliance.
It appears that there are tax angels. Inspired by an article from the Detroit Free Press, the post Musician Jack White Pays 142k Tax Bill for Detroit Landmark reports on musician Jack White’s generous donation of $146,000 to pay the Detroit Masonic Temple massive tax debt and rescue it from foreclosure. Born in Detroit, White had a connection to the Masonic temple as his mother served as an usher there. Other motivations are the Masonic’s past rock concert glories, including The Who and the Rolling Stones and the fact that it is the world’s largest masonic temple.
IRS Tax Tips for Small Business Recordkeeping – The IRS has been hard at work creating helpful tax resources for small business owners and the self-employed including the release of a useful recordkeeping FAQ webpage emphasizing the benefits of good recordkeeping. Business owners are good at what they do, but they sometimes fall down in the recordkeeping department. This information is a handy guidance tool.
$1.2 Million Owed in Back Taxes by Beyoncé’s Dad – Father and former manager of mega-superstar Beyoncé, Mathew Knowles made millions. However, it appears he did not pay his taxes and according celebrity news site TMZ; the IRS filed a tax lien against Beyoncé’s dad for $485,575.95 in 2010 and $728,004.89 in 2011. The IRS tax debt comes out to a whopping $1,213,580.84. Mathew Knowles is a smart man; just less knowledgeable about what it means to owe back taxes to Uncle Sam.
Have a great weekend and to all the Dad’s out there – Happy Father’s Day.
Monday, June 10th, 2013
When Mathew Knowles managed the career of his superstar singer of a daughter, Beyonce, he made millions.
So many millions, in fact, that Knowles owes the IRS $1.2 million in back taxes, according to celebrity news site TMZ.
The IRS filed a tax lien against Beyonce’s pops for $485,575.95 in 2010 and $728,004.89 in 2011.
Beyonce started her singing career with the group Destiny’s Child. Mathew Knowles managed the group, which became one of the best-selling all-female acts in music history.
In 2002, Knowles founded Music World Gospel, which is now the largest African-American-owned and -operated gospel label in the world. Prior to his work in the music industry, Knowles worked as a salesman with Xerox.
Friday, May 31st, 2013
This was a short, yet busy week for tax relief news. Stories ranged from celebrity tax woes and prison sentences for tax evaders to tax tips and benefits for military personnel.
Actor Chris Tucker Pays Nearly $1 Million toward Tax Debt – Chris Tucker has been in the spotlight over the last few years, not so much for his talent but sadly, for his huge $12 million tax debt. A recent article by TMZ reports that Mr. Tucker started to chip away at the back taxes, paying nearly $1 million to the state of Georgia for two tax liens. While it will take a while to pay down the entire tax debt, it’s good to see Chris Tucker not going the way of Wesley Snipes or Lauryn Hill and serving time in jail.
Arizona Woman Gets 30 Months in Prison for Tax Evasion – Shaneika Earline Sims, 30, of Casa Grande, Arizona will spend the next 30 months in federal prison after admitting she conspired to defraud the U.S. government by filing up to 150 false tax returns that claimed $548,653 in unjustified refunds. This elaborate scheme used the identities of inmates in state and local detention facilities. Sims is also required to pay $403,002 in restitution and serve a 36-month term of supervised release once her prison time is up.
Tax Evasion by Kentucky Businessman Who Hid Assets from IRS – Darrell Mathis, of Warren County, Kentucky, pleaded guilty to evading payment of $177,634 in federal income taxes due for the tax years 1999 through 2001. Mathis falsely submitted an IRS Offer in Compromise form in which he concealed his personal assets, including vehicles, boats, and campers, real estate and ownership of his business, Tri-State Construction.
Mathis concealed his assets by using the name of a nominee to hide them from the IRS. He also made sure W-2s were not filed in his name. Mathis will pay a high price for his tax evasion attempts. He faces up to 25 years in prison and a $500,000 fine.
Tax Relief Tips for Military Personnel - Service members are entitled to tax benefits that may financially help active duty members as well as reservists and National Guard members. This post highlighted a recent Don’t Mess with Taxes article that cited the IRS Publication 3, Armed Forces Tax Guide. The tax relief tips covered the following topics:
· Taxable, tax-exempt pay
· Filling deadlines
· Combat extensions
· Uniform costs
· Travel expenses
· Tax residency
Men and women in uniform who are battling the IRS are encouraged not to do so alone. Their best defense is to contact a tax attorney or Certified Tax Resolution Specialist (CTRS) who can provide tax relief at both the state and federal levels and help resolve IRS tax problems on their behalf.
Have a great weekend!
Thursday, May 30th, 2013
It appears actor and comedian, Chris Tucker is taking a bite out of his huge $12 million dollar tax debt. According to a TMZ.com article titled: “Chris Tucker’s Tax Debt – $1,000,000 Down, 12 More to Go!“, it seems that the actor recently wrote checks totaling $985.028.98 to pay off two Georgia state tax liens: one for $592,594.82 for tax year 2007 and $392,332.16 for tax year 2006.
We reported in a post back in 2011 about Chris Tucker’s giant tax problems. At that time, he owed $11.5 million in IRS back taxes and IRS penalties. He had also fallen so far behind on payments to his $6 million waterfront Florida home that SunTrust had begun foreclosing on the property.
The whole point of mentioning the tax problems of the rich and famous is to show that the IRS goes after high-profile celebrities and average tax cheating taxpayers with the same vigor. If you are being threatened with a tax lien, the worst thing you can do is ignore it! If you do, your situation will go the way of Chris Tucker’s. As I’ve said before tax liens are serious business – when the IRS files a one against someone, they are using the lien to enforce collection activity for back taxes owed.
Here are some things to know about federal tax liens:
- They are public records indicating your back taxes owed. Information contained on public records show up on credit reports making things like financing an automobile or a home nearly impossible. (This is how we know Chris Tucker’s tax debt to the penny.)
- Federal Tax Liens also can tie up personal property and real estate by:
- Not allowing the sale or transfer the property without a clear title.
- Taxpayers unable to borrow against their property because of their inability to get a loan.
- A Federal Tax Lien is difficult to remove even if back taxes are paid in full, without going through specific procedures and protocols.
If you have received a collection notice from the IRS threatening a IRS tax lien, it is very important that you act now to avoid harsh IRS penalties and fines. Contact a tax attorney or Certified Tax Resolution Specialist who can immediately designate your case “currently not collectible” (if applicable). These tax pros can also help you file an IRS collection appeal to remove your tax lien, especially if there’s a bank levy filed on your bank accounts or your assets. Hiring a seasoned tax professional can not only sort out your tax woes, it can help keep your credit rating intact and put this IRS problem behind you.
Friday, May 10th, 2013
This was a busy week in tax relief and IRS news. The stories that caught our attention ranged from how long to keep IRS tax records, to celebrity tax woes and finding tax debt solutions to the pro’s and cons of IRS prepared returns.
This week started with a helpful post titled: Tax Relief Tips for How Long to Keep IRS Records. A general rule of thumb guideline suggests that tax records be kept for three years. However, there are some exceptions where records must be kept longer or even indefinitely such as:
- Taxpayers who underreported more than 25% of their gross income
- Taxpayers who filed fraudulent returns or did not file at all
- Taxpayers with property deductions
- Businesses with Employees
Important note: Make sure your check with your tax professional before getting rid of important records. If your tax pro says it’s ok and your files are really, really old go ahead and shred.
Celebrity Tax Woes Abound – As I have said before, the IRS does not discriminate – it goes after millionaires, celebrities and average taxpayers equally if they believe them to be cheating or not paying taxes. Here are two celebrities who learned this first hand:
Singer Lauryn Hill Gets Three Months in Jail for Tax Evasion – Actress and award winning singer – Lauryn Hill was sentenced Monday to three months in prison plus three months home confinement for failing to file tax returns for five years and not reporting more than $2.3 million in income. Hill stated she had always meant to “eventually” pay her tax debt but was unable to during a period of time when she dropped out of the music business. Last year on her Tumblr account, Ms. Hill claimed that she went “underground” as a means of survival but did not “deliberately abandon” her responsibilities (meaning her IRS tax debt). Naturally, the IRS did not see it that way.
Actor Stephen Baldwin Guilty of Tax Charges – Stephen Baldwin pleaded guilty to failing to file his income taxes for three years and was ordered to pay $300,000 in back taxes to the government. Baldwin, the youngest of the Baldwin brothers, blamed his tax troubles on mistakes made by professionals he hired to manage his affairs while he was away shooting the reality TV show Survivor.
This week’s post titled: For Those with Tax Debt, Solutions Are Available was an appeal to those who haven’t addressed their tax troubles that it’s time to see a qualified tax professional to get to know your options. Sometimes people just need to know they are not the only ones facing IRS stress. To help them understand that cases like theirs are resolved every day, I highlighted the success story of a client named Bill.
Bill was reluctant, scared and overwhelmed by his IRS tax debt issues. As one of my newest clients, Bill was certainly one of my most nervous. He explained that his business had gone under as a result of the economic recession and due to some bad tax advice, he not only owed IRS back taxes, he was worried that not everything had been reported. The good news is that Bill is now on the road to tax recovery because of the strategies we employed, primarily our IRS negotiations that resulted in him entering into an Offer in Compromise agreement. This significantly reduced Bill’s IRS debt and gave him a fresh start.
IRS Prepared Tax Returns: Are They a Good Idea? I decided to compose a post based on being asked what my thoughts were about the IRS’ proposal to pre-prepare tax returns. Read the post for my entire commentary but my bottom line is this: this recent IRS press push appears to me to be a way for them to garner support for how the new system will decrease of audits. The idea of “fill in all the line items received from third party and self-accept the way it comes across” just does not sound like a viable solution. The proposed system also seems like a ploy to raise an inordinate amount of money to fill government coffers.
Have a great weekend!