How the IRS and State Taxing Authorities Purposefully Target and Make Examples out of Celebrities
The Supreme Court of the United States has held that the pursuit of tax crime is “calculated to induce prompt and forthright fulfillment of every duty under the income tax law.” Spies v. United States, 317 U.S. 492, 497 (1943). By and through this opinion, law enforcement agencies including taxing agencies such as the Internal Revenue Service have evolved to develop targeted yet subtle approaches to encourage compliance with tax laws.
I’ve been a tax attorney for over thirty years and when I take a step back, I can see that a big part of the modern day enforcement strategy includes ‘making examples’ out of individuals as an effort to educate (or scare) the majority into complying with the tax law. In the recent years, celebrities and many others, from all walks of life, have fulfilled this role for the IRS and state taxing agencies.
In the last year alone, the IRS and state taxing agencies have made examples out of celebrities who failed to file their tax returns in accordance with the tax laws. Failure to File, Keep Records or Supply Information are tax crimes that include, failure to pay an estimated tax, failure to file a tax return, failure to keep records, and failure to supply information. Of all the tax crimes, failure to file is the most frequently encountered by our office in both the civil and criminal realms.
2012 – Prosecutions/Sentencings of celebrities who had unfiled tax returns:
Actor, Stephen Baldwin, age 46: Dec. 2012, arrested on a charge of failing to file New York state personal income tax returns for three years. Baldwin’s alleged tax liability for failure to file in 2008, 2009 and 2010 is more than $350,000, including penalties and interest.
Rapper Beanie Sigel, age 38: July 2012, sentenced to two years in prison for failing to file federal income tax returns from 2005 to 2009.
Singer Lauryn Hill, age 37: June 2012, pleaded guilty to failing to file income tax returns, for tax years 2005 through 2007.
It is interesting to note that these celebrities are all relatively young. The criminal punishment for unfiled tax returns is: misdemeanor charges and federal prison sentencing of up to 1 year for each year of unfiled tax returns, plus criminal fines, plus the costs associated with the prosecution. In addition to the criminal tax law issues, the individuals still have civil tax problems to deal with which include steep monetary fines and tax penalties, the income tax due itself, and the interest charged on both.
In over 30 years of tax law practice, the people of Moskowitz LLP have helped thousands of individuals and businesses who came to us with years of unfiled taxes, back tax problems, and tax bills. Many people miss one year of tax filings and then do not know how to legally fix their tax troubles. Unfortunately, missing just one tax return is not only a tax crime, but it also can lead to people living in fear of the IRS, thinking they can’t have a bank account, thinking they cannot have a legitimate job or business and think they cannot have a life.
We have helped thousands of clients with tax problems as well as helping our clients return to a normal life with their families. Let us help you. Call or email today for an attorney-client privileged, legal tax consultation regarding your unfiled or back tax returns problems.
Disclaimer: Because of the generality of this blog post, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Prior results do not guarantee a similar outcome. Furthermore, in accordance with Treasury Regulation Circular 230, we inform you that any tax advice contained in this communication was not intended or written to be used, and cannot be used, for the purposes of (i) avoiding tax related penalties under the Internal Revenue Code, or (ii.) promoting, marketing, or recommending to another party any tax related matter addressed herein.