It’s not tax time just yet, but it’s looming uncomfortably on the horizon. The conscientious among us have already filed their tax forms or are in the process of doing so. The rest of us hem, haw and put it off until the last minute, which this year comes two days later -- on April 17.
Apart from the punctual and the lackadaisical, another category of taxpayer exists: Those who, for one reason or another, fail to accurately disclose all of their earnings. Sometimes this is a simple mistake. Sometimes it’s the accountant’s fault. Sometimes it’s a deliberate, bald-faced attempt to avoid paying what they owe.
Conventional wisdom would hold that celebrities should fall into none of those categories. After all, don’t they have enough money to keep a reputable accountant on retainer, to ensure that all their I’s are dotted and T’s are crossed with the taxman?
As it turns out, not always. Some celebrities have not only fallen out of good standing with the Internal Revenue Service but have served jail time and paid massive fines for their transgressions against the state and the federal government.
Here are some of the celebrities who just couldn’t get that return finished by the tax deadline.
In the 1990s, Wesley Snipes was a popular box-office attraction thanks to such movies as “White Men Can’t Jump” and the “Blade” trilogy. However, what many people didn’t know was that when he wasn’t slaying vampires, he was giving the slip to Uncle Sam. He failed to file tax returns between 1999 and 2006, and prosecutors claimed that during those years, $38 million worth of income had gone unreported.
Snipes justified the nonpayment in a 2006 statement in which he claimed he was “a nonresident alien” of the United States. In reality, he was born in Florida. He also stated the U.S. government had "no lawful authority to impose any kind of criminal sanctions" and that he had no income for the U.S. government to legitimately tax. The courts didn’t see it that way, and on Feb. 1, 2008, he was convicted of three misdemeanor charges of failure to file income tax returns.
In 2000, a former corporate trainer from Rhode Island named Richard Hatch was the winner of a new show on the CBS network called “Survivor.” He walked away from the show over $1 million richer, but in September 2005 a federal grand jury in Providence, R.I., indicted him on charges of failing to report the money he had won in his 2000 tax return.
The indictment not only listed his unreported winnings but also unreported money from rental properties he owned, the car he won on the show and false statements that he had knowingly given about all of the above. In 2006, he was found guilty of tax evasion and sentenced to 51 months in prison.
Leona Helmsley and her husband, Harry, were New York real estate magnates whose vast hotel empire included the Helmsley Palace on Madison Avenue in Manhattan. They had their Connecticut mansion remodeled in 1983; five years later they were indicted on charges of evading $4 million in income taxes for fraudulently billing work on the mansion to their hotels as business expenses.
A key witness at the trial was former housekeeper Elizabeth Baum. According to The Associated Press, Baum testified that Leona Helmsley had said “We don’t pay taxes. Only the little people pay taxes.” Leona Helmsley was ultimately convicted of evading $1.2 million worth of federal income taxes. Her husband was found not mentally competent to stand trial. They both have since died.
Frequently referred to as “The Hollywood Madam,” Heidi Fleiss ran a prostitution ring during the early 1990s. Although she never named names, her business attracted clients who were well-known and well-off. However, her business became too popular for its own good. She gained the unwanted attention of other job creators in the prostitution sector, who had become envious of her massive success.
Fleiss alleges these competitors tipped off the Los Angeles police, who began tapping her phone. Ultimately, she was arrested in June 1993. Fleiss was convicted of federal tax evasion charges, which carried a seven-year prison sentence. If she had only filed that 1099 form, none of this would have happened!
Baseball's "Charlie Hustle" Pete Rose made his name with the Cincinnati Reds, first as a player and later as a manager. Despite his many on-field accomplishments with the Reds and Philadelphia Phillies, he agreed to permanent ineligibility from baseball when he was caught gambling on games, including those played by his own team. As if that weren’t bad enough, in 1990 Rose was sentenced to five months in prison and fined $50,000 for tax evasion, according to The Associated Press.
He had failed to report more than $350,000 of income from autograph signings, sales of memorabilia and even the gambling that had cost him his career and good standing. At the sentencing hearing, Rose accepted responsibility for his predicament, saying "I have no excuses because it's all my fault."
The youngest person ever elected mayor of Detroit, Kwame Kilpatrick took the oath of office in 2001 at age 31. Despite this impressive accomplishment, Kilpatrick’s tenure was notable for its many scandals and corruption allegations, and he resigned after pleading guilty to such felonies as perjury and obstruction of justice, according to The New York Times.
His problems didn’t stop there. The former mayor had created a charitable organization that received tax-exempt status, but authorities accused him of using the fund to pay for personal expenses, political consulting and "counter-surveillance and anti-bugging equipment." On June 23, 2010, Kilpatrick was indicted on multiple federal charges, including filing false tax returns. Each of the five tax counts carried a possible sentence of five years and a $250,000 fine. The former mayor has pleaded not guilty, and his case goes to trial in September 2012. Kilpatrick could not be reached for comment.
Country music legend Willie Nelson redefined the term “sing for your supper” when he released the album “The IRS Tapes: Who'll Buy My Memories?” in 1992. The singer had released numerous hits before, such as the 1970s classics “Red Headed Stranger” and “Stardust,” but there was a lot more riding on this album than on those.
In 1990, the IRS had served Nelson with a bill for $32 million in back taxes, one of the largest ever presented to an individual, and he recorded the 1992 album to gather the funds to pay it. The grizzled Texas troubadour claimed that his taxes had gone unpaid because his accounting firm, PriceWaterhouse, had put his money into tax shelters of dubious validity instead. The singer settled his debt with the IRS in 1993.
Darryl Strawberry spent most of his baseball career with the New York Mets. After winning the 1983 National League Rookie of the Year award, he continued distinguishing himself on the field throughout his career, but he was dogged by legal, health and personal problems that at times obscured his professional accomplishments.
One such problem was his 1995 indictment for tax evasion. He pleaded guilty to a single felony count, based on his failure to report $350,000 in income from autograph signings, personal appearances and sales of memorabilia between 1986 and 1990. Strawberry ultimately agreed to pay over $430,000 in delinquent taxes, interest and penalties, according to The Associated Press.
Nicolas Cage's films have been cleaning up at the box office since the 1980s. One of those hits was the 1995 film “Leaving Las Vegas,” where he played a suicidal alcoholic, a role for which he won an Academy Award. In 2009, he was hit with a lien of over $6 million by the IRS for delinquent taxes, interest and penalties, and received a separate lien for unpaid property taxes.
In January 2010, Cage announced he would pay the IRS a jaw-dropping sum to settle all of his debts. "Over the course of my career I have paid at least $70 million in taxes, unfortunately, due to a recent legal situation, another approximate $14 million is owed to the IRS," Cage told People magazine. "However, I am under new business management and am happy to say that I am current for 2009, all taxes will be paid including any to be determined state taxes."
To millions of men throughout the United States, Joe Francis is nothing less than a hero. He is the founder of Mantra Films, better known as the production company responsible for the “Girls Gone Wild” series of videos, which compiles amateur footage of female college students in various states of undress. While this was not the most groundbreaking idea in world history, it was still good for $40 million a year in sales, according to the Los Angeles Times.
In 2007, Francis was indicted on two counts of tax evasion by a federal grand jury in Nevada. The charges alleged the filmmaker listed $20 million in deductions as business expenses, when in fact the money was used for personal expenses such as the construction of a new house in Mexico. He pleaded guilty in 2009, according to the Associated Press.