Judge to Snipes: Check into Pennsylvania Prison by Next Week

Yesterday TMZ reported that actor Wesley Snipes was ordered to report to prison by next week. Snipes was warned that failure to report by December 9th, would result in "additional criminal charges."

Snipes was convicted in 2008 and has appealed several times, but it looks like he will finally have to serve his sentence. He is due to check into a prison located in Pennsylvania. Let’s hope the makers of “Master Daddy” (http://www.imdb.com/title/tt1757808/ ) can find a replacement, since Snipes apparently won’t be available.

Wesley Snipes Ordered To Surrender For 3-Year Prison Sentence

It looks like Wesley Snipes has reached the end of the road in his tax evasion case. The Judge just rejected his last appeal request and has ordered him to start serving his three year prison sentence. Reports are rolling in that Snipes surrendered to authorities on Friday and is in lockup as I write.

"The defendant Snipes had a fair trial; he has had a full, fair and thorough review of his conviction and sentence. ... The time has come for the judgment to be enforced," the judge wrote in his 16-page decision.

The 48-year-old star of the "Blade" trilogy and Spike Lee's "Jungle Fever" was convicted in 2008 on three misdemeanor counts of willful failure to file his income tax returns. He was acquitted of two more serious felony charges.

The Federal Bureau of Prisons would not say where Snipes was to surrender until he was in custody, though inmates generally are placed within 500 miles of their residence, said spokesman Edmond Ross.

Continue reading at Huffington Post.com...

IRS Files $1.13M Tax Lien Against Lil Wayne

From WebCPA:

The Internal Revenue Service has filed a tax lien for $1,138,760 against rap singer Lil Wayne, who is currently in jail on weapons charges.

The lien covers taxes owed from 2004, 2005 and 2007. The 27-year-old performer, also known as Weezy but whose real name is Dwayne Michael Carter Jr., has had problems with the IRS in the past. The IRS filed a lien for $977,840 against him in 2008, but he paid the taxes he owed later that year, according to the Detroit News.

Carter was arrested in July 2007 for possessing a .40 caliber pistol and marijuana following a performance at New York’s Beacon Theatre. He pleaded guilty to the weapons charge and is currently serving a one-year sentence on Rikers Island in New York.

Rapper Method Man Pleads Guilty to Tax Evasion

Celebrity and rap star Method Man plead guilty in a New York court yesterday, for failing to pay State income taxes for years 2004 – 2007. After paying the State $106,000 in restitution and penalties, he will not have to go to jail. Read more on the story from E! Online below:

As part of a deal with prosecutors, the 39-year-old hip-hopster, real name Clifford Smith, was sentenced to a conditional discharge, which means he'll avoid jail time after paying approximately $106,000 in restitution, penalties and interest he owed to New York State. The arrest will also be expunged from his record if he stays out of trouble.

Method Man was busted Oct. 5, 2009 for failing to file returns and pay state income tax from 2004 to 2007.

"Failure to pay your taxes is not a victimless crime," said Richmond County District Attorney Daniel Donovan, Jr. "In these days of massive budget shortfalls and service cuts, tax evasion is a crime against all New Yorkers. Whether you are a celebrity or an 'Average Joe,' you will be investigated, arrested and prosecuted."

Judge Alan J. Meyer approved the plea arrangement on Monday. A rep for the How High rapper was unavailable for comment.

Should the IRS prosecute confessed evaders of offshore accounts?

In September 2009 the IRS has called attention to its voluntary disclosure program to encourage taxpayers to come forward on foreign bank accounts. The IRS published the Voluntary Disclosure: Questions and Answers which describes the extension of the Sept. 23, 2009 deadline for the special voluntary disclosure related to offshore accounts. It explains those who voluntary disclosed their offshore accounts would generally suffer a less harsh penalty than what could be applied under the law. According to one tax blog and a Wall Street Journal article of May 5, 2010, about 15,000 US taxpayers did “voluntary disclose” their offshore accounts prior to the end of the deadline for such disclosures.

However, if the IRS is already examining the taxpayer (even on another matter) then the taxpayer is not eligible. Also, the disclosure has to come before the IRS has the information from another source, of course.

A blog in TaxingMatter raises a great question: Should their confession even under the circumstances that the IRS already has information on them, provide a "get out of jail free" card and not prosecution?

Do you agree with the people that seem to “rank” tax evaders as a non-serious crime? Activity tax evasion as though it really is not a serious crime. The harm to ordinary Americans is not trivial-- there is the loss of revenues, not to mention the burden borne by "good" taxpayers who have to make up one way or another for the gap in revenues. Are we sending the message that some people are above the law?

Or do we agree with the criminal tax lawyers that are criticizing the IRS for its decision to prosecute some people who confessed they used foreign bank accounts to evade taxes, calling the IRS actions “trickery” because some people confessed to their undeclared Swiss bank accounts shortly before the IRS declared a special amnesty program?

Read more in the Wall Street Journal here.

Tax Day 2010: How the Income Tax Put Al Capone behind Bars

From the Huffington Post:

As this year's tax deadline approaches, let's skip the usual grumbling and look at the bright side: Income tax has helped the government put some of the country's most notorious criminals behind bars.

In 1931, when Al Capone was convicted of income tax evasion and sentenced to 11 years in prison, the legendary gangster complained that he got a raw deal.

"I've never heard of anyone getting more than five years for income tax evasion," said the man known as "Scarface." "It's a blow to the belt."

At the time, Capone's sentence was by far the stiffest ever made in a tax-evasion case. It put the Chicago mob boss forever out of business and crippled his criminal enterprise.

A reasonable argument can be made that Capone was punished for his long list of perceived and actual crimes, not just for his failure to pay income tax. The income-tax charge wasn't the most precise weapon for bringing Capone to justice, but it was the quickest and surest, and the government preferred not to waste time.

Today, while Capone remains American history's most iconic gangster, his greatest legacy may be his punishment. Tax cases are used routinely to go after suspected criminals--including drugs dealers, spies, embezzlers and, most recently, terrorists--who might otherwise escape punishment. In today's cases, as in Capone's, a quick prison sentence is often deemed more important than a lengthy one, in order to prevent future crimes.

UBS Informant Files Complaint With DOJ

According to ABC News.com, the key whistleblower in the UBS tax evasion case - Bradley Birkenfeld – filed a complaint on Tuesday that prosecutors made false statements to the judge who sentenced him to prison.

Attorneys for informant Bradley Birkenfeld asked for an in internal Justice Department investigation and said the "inaccurate, misleading and incomplete" allegations should be corrected. The complaint was filed with the department's Office of Professional Responsibility, which investigates ethical matters involving prosecutors and other employees.

"These statements had a material impact on Mr. Birkenfeld, and caused the Department of Justice to improperly seek jail time for one of the most important tax whistleblowers in American history," wrote Birkenfeld attorneys Stephen Kohn and Dean Zerbe in the complaint.

Justice Department spokesman Charles Miller declined comment.

Birkenfeld, 44, is scheduled to begin serving a prison term Friday of more than three years. He and his attorneys — affiliated with the National Whistleblowers Center — have embarked on a campaign to reduce or eliminate the sentence based on his disclosures, which led UBS last year to pay a $780 million fine and agree to reveal names of thousands of suspected American tax cheaters.

Tiger Woods New Mistress Woe: Tax Evasion Charges

As the country continues to follow Tiger Woods, and the excessive media coverage of his transgressions, many financial experts are beginning to wonder what – if any – tax implications his affairs might lead to. According to reports, Tiger gave away thousands in “hush money” to different women, and as the Improper.com points out in this article it could result in a gift tax penalty.

Woods reportedly wired tens of thousands of dollars a month to his mistresses, according to MSNBC, quoting several unnamed women who were involved with the golfer. The dollar amounts range from $5,000 to $10,000 per month, and some of the women claimed to be getting as much as $20,000 per month.

“The money comes via a wire transfer,” one woman told MSNBC. “There’s no contract about it, there’s no discussion about what it’s for, but it’s implied that it’s in exchange for keeping quiet about his affair.”

If Woods is paying women to be quiet, he better have covered his tracks, a tax expert said. “The IRS regulations require that someone gifting in excess of $13,000 per year file a gift tax return,” John Fisher, a Pennsylvania-based tax attorney, told the New York Daily News.

In addition, any person who receives $10,000 or more in gifts must report the amount on their tax return, declare the money as income and pay taxes on it.

If the money was for “services rendered” it still must be reported as such, and Woods, or his corporation, would have had to issue 1099 tax forms to the women.

USA Tops International Tax Haven List, Thanks To Delaware

Although the Federal government is going to great lengths to take action against taxpayers using Swiss bank accounts to avoid paying taxes, according to the U.K. based Tax Justice Network, Delaware is the biggest tax haven on the planet. Their report claims the state is "the most secretive financial jurisdiction in the world," based off an analysis “60 financial jurisdictions according to level of secrecy and cooperation with foreign tax authorities.”

Delaware even beat out Luxembourg, Switzerland, and the Cayman Islands who came in 2^nd, 3^rd, and 4^th place respectively. Check out the following facts about Delaware from the Tax Justice Network’s press release, thanks to Huffington Post.

• According to the Delaware Secretary of State's office, their operating budget was $12 million in 2007 and they made $24 million in the fees for expedited incorporation filings alone.
• There are currently some 695,000 active entities registered in Delaware, including 50 percent of the corporations publically traded on the U.S. stock exchange.
• New business formations in Delaware are currently running at about 130,000 per annum.
• The growth of private individual deposits by non-residents was most robust in the United States outranking other popular financial jurisdictions such as the Cayman Islands, United Kingdom, and Luxembourg with total non-resident deposits equalling $2.6 trillion in 2007.

1st UBS Client Charged By US Gets Probation In Tax Case

The results are in for the first U.S citizen to be tried in a UBS offshore banking case. Steven Rubinstein – an accountant from Florida – was ordered to pay a $40,000 criminal fine and sentenced to 3 years of probation after pleading guilty in court.

The sentence was lighter than the recommendation of prosecutors, who sought a one-year prison term for Rubinstein. He faced a possible sentence of 18 to 24 months under advisory sentencing guidelines.

Rubinstein was sentenced in a Florida federal court for filing a false tax return. Prosecutors charged him in April and he pleaded guilty in June.

Prosecutors said Rubinstein communicated with UBS bankers from 2001 to 2008 about the purchase and sale of securities worth more than 4.5 million Swiss Francs. They also said Rubinstein repatriated roughly $7 million into the U.S. to buy property and build a home in Boca Raton, Fla.

Continue reading at WSJ.com…

UBS Registered Mail Warns U.S. Clients

From Reuters.com:

Swiss bank UBS AG warned U.S. customers by registered mail their account details may be given to U.S. tax authorities, a method that could itself breach secrecy laws, a Swiss paper said on Sunday.

The use of registered mail and envelopes showing the sender was UBS could enable the U.S. authorities to trace customers wanted for tax evasion well before their details are handed over under a U.S.-Swiss double taxation agreement, Sonntag weekly paper said.

A spokesman for UBS declined to comment on the report.

Switzerland and the United States settled a row over evasion of U.S. taxes in August when Switzerland agreed to hand over details of 4,450 U.S. accounts at UBS.

But it could take into early 2010 before the first names are handed over under the agreed legal procedures.

Some 7,500 Americans voluntarily disclosed information about hidden overseas assets under a tax amnesty program that expired on October 15, according to the top U.S. tax collector.

Cage Owes $6,617,550.84 in Tax Debts

Earlier in the year I put together list of the 5 biggest celebrity tax evaders of 2009, and although Nicolas Cage was already at the top of my list, recent reports have emerged claiming that he owes more then everyone had originally thought. According to TMZ, in addition to the $6,257,005 he owed in unpaid taxes from 2007, he also owed for the following tax years.

2002 -- $70,190.05

2003 -- $179,738.23

2004 -- $110,617.56

That brings his total tax debt to an astounding $6,617,550.84. Associated Content also claims that Cage owes another $2 million to the East West Bank. With all the money he makes form his films, many are wondering how Cage could get into such a financial mess. Well, blame the real estate industry. He reportedly owns dozens of properties across the United States and Europe, including an 11th century German castle called Schloss Neidstein that he recently sold. However, with real estate values down all across the world Cage is reportedly having difficulty selling his properties to repay his debts.

Full House Star Dave Coulier Owes Back Taxes

According to WalletPop.com there is a new addition to the list of 2009’s biggest celebrity tax evaders. Earlier in the week it was discovered that 90’s sitcom star Dave Coulier is in serious debt to the IRS. His debts reportedly total over $50,000 and the both the IRS and his home state of California have both issued liens against Coulier to collect the unpaid tax debts.

The state of California filed an $11,793 lien against him on May 4 in the Los Angeles County Recorder of Deeds office. The IRS filed a $37,063 lien against him on March 17, 2008, in Los Angeles County.

Checking up on Dave Coulier's Official website, I found no mention of his little tiff with the taxing authorities. He does however, indicate that he'll be visiting close to my home in Wisconsin next month. I also checked Dave's Twitter feed to see if he tweeted about the situation. He hasn't yet mentioned his back taxes on Twitter, but he does indicate that becoming a senator may be one way to pick your nose in peace - or not.

This much I can tell you for certain; It's better to pay our taxes when they are due, than it is to try retrospectively prying the IRS off our backs. I always suggest leaving tax form preparation to a professional tax accountant, because being able to talk in comical voices won't make a tax audit one bit funnier.

'Girls Gone Wild' Producer Sues Former Employees over Tax Evasion Charges

From the LATimes.com:

"Girls Gone Wild" empire founder Joe Francis is blaming his tax troubles on a trio of former employees in a new lawsuit.

The complaint, filed in Los Angeles Superior Court on Tuesday by "Girls Gone Wild" production company Mantra Films, alleges that the firm's former chief financial officer Michael Barrett, former head of technology Roman Pelikh and former vice president of operations Will L'Heureux defrauded Mantra and falsely accused Francis of tax evasion.

The lawsuit charges that the three formed their own company, WMR Marketing, and hid their involvement in it as they approved fraudulent invoices it submitted to Mantra worth nearly $500,000. It also claims that Pelikh submitted and obtained reimbursements for hundreds of thousands of dollars of fraudulent expense reports.

It claims that the three contacted the Internal Revenue Service to falsely accuse Francis of tax evasion, a charge for which he was indicted in 2007, in order to remove "the possibility that Francis could catch the ongoing fraud and theft." The trial for those charges will reportedly start in October. It's one of numerous legal problems in which Francis has found himself in recent years.

The lawsuit asks for at least $5 million in damages.

A person who answered a phone number listed for Pelikh hung up when contacted by The Times. Barrett and L'Heureux could not be located.

Is 'Friending' in Your Future? Better Pay Your Taxes First

Most of you have probably heard the warning about putting things on your MySpace, FaceBook, or Twitter profile that you might not want your employers to see. But have you ever thought about not wanting the IRS to know what you put on your profile? Well, you might want think about it next time you post a blog entry about your personal finances. According to the Wall Street Journal, some state revenue agents have begun gathering information about tax evaders from social networking sites.

In Minnesota, authorities were able to levy back taxes on the wages of a long-sought tax evader after he announced on MySpace that he would be returning to his home town to work as a real-estate broker and gave his employer's name. The state collected several thousand dollars, the full amount due.

Meanwhile, agents in Nebraska collected $2,000 from a DJ after he advertised on his MySpace page that he would be working at a big public party.

In California, which has recently been so strapped for revenue it has had to pay some bills with IOUs, agents are also using social Web sites. When one delinquent was identified as a rigger of sails, a curious collection agent searched his name and the term online and found a discussion board used by local riggers. In one thread someone asked where the rigger was because his store had closed, and a reply was posted, "Oh, he moved across the bay." The agent found the man and collected a four-figure sum.

Continue reading at WJS.com…

Joe Francis to Use "Deductions Gone Wild" Defense in Tax Evasion Trial

According to the Smoking Gun, via the Tax Prof Blog, Joe Francis, founder of the Girls Gone Wild video series, is going to use a slide show to try to convince a jury in his upcoming tax evasion trial that various expenses are deductible as business expenses. Check out the following explanation on his defense, or head over to the Tax Prof Blog to see pictures of the slides that Francis intends to use.

As part of Joseph Francis's opening statement in U.S. District Court in Los Angeles, his defense team will show a series of slides (or "opening statement demonstratives") that link the "Girls Gone Wild" boss and his firm to movie stars like Jennifer Aniston, Jack Nicholson, Vince Vaughn, and Orlando Bloom. A copy of the slide presentation was filed last week in federal court by Francis's defense team.

Prosecutors allege that Francis, whose trial is set to open in mid-October, illegally sought to conceal income in offshore companies and deducted millions in phony business expenses, including costs incurred at Casa Aramara, Francis's beachfront Mexican home. One defense slide ... includes photos of Aniston, ... Bloom, and Vaughn, who are described as "celebrity guests" at the Punta Mita property. It appears that Francis, 36, will argue that the estate was an investment property frequently leased to wealthy tenants and, as such, certain business tax deductions were warranted.

[One] slide will helpfully inform jurors that Francis is "in Business of Sex," while another provides a "Marketing 101" overlook at the "Girls Gone Wild" soft-core franchise. The defense slide show will also attempt to draw parallels between Francis's business and Hugh Hefner's Playboy empire.

The 5 Biggest Celebrity Tax Scandals of 2009

So far in 2009 there have already been a dozen or so celebrities who have made headlines for their tax problems. I have covered a couple of them on my blog so far, but since there have been so many I wanted to put together a list of the biggest celebrity tax scandals. The individuals listed below may be rich and famous, but that does not mean anything to the Federal government. If you do not pay your taxes then the IRS will come after you, even if you are a celebrity.

5. David Brenner

Best known for his stand up comedy, Brenner is also and established author, actor, and filmmaker. He has made over a hundred television documentaries, one of which was even honored with an Emmy award. Brenner also holds the record for the most appearances on "The Tonight Show", with over 158 in his career. Currently, he is working on a new comedy website that will reportedly be known as The Funny Deli.

Earlier this year it was announced that Brenner owed the IRS over $68,222 in unpaid tax liabilities. Although he avoids discussing his finances in interviews, public records show that Brenner filed Chapter 7 bankruptcy in 2004, listing more than $1.73 million in liabilities and only $78,324 in assets. Unfortunately that did not seem to fix his financial troubles, as the IRS filed a lien against his property on June 25^th of this year. Reports claim that Brenner has already negotiated an Installment Agreement with the IRS to repay his debts through monthly payments. For more information on IRS Installment Agreements, check out this page on my law firm’s website.

4. Stephen Baldwin

Nearly everyone in the country has heard of the famous Baldwin brothers. Nearly all four siblings work in the entertainment industry and Stephen is no exception. He first showed interest in entertainment while attending high school where he was active in choir and theater. Although he starred in films such as "The Beast of War", his first break-through role was in the 1995 hit movie "Usual Suspects”. Recently, he appeared in a handful of reality shows including "Celebrity Apprentice" and “I’m a Celebrity … Get Me Out of Here.”

Although he has been on a number of shows over the past few years, Stephen and his wife Kennya were forced to file chapter 11 bankruptcy earlier this year. In addition to millions of dollars in mortgage debt, the couple also owes the IRS a reported $749,974 in Federal tax debts stretching from 1999 to 2008. Their filing also cited another $194,527 in state tax debts owed to New York.

3. Sinbad

Although Sinbad was once a popular comic, these days his financial troubles are getting more attention than his comedy. Since the beginning of his career in the early 80’s, Sinbad has appeared in several motion pictures including "Jingle All The Way" and "The First Kid." Unfortunately, he has not had a hit project in nearly a decade.

In 2007, it was announced that Sinbad topped California’s list of delinquent taxpayers, with a state tax debt totaling over $2.1 million. At that time it was reported that the debts dated back to 1993. Two years later, Sinbad has apparently still has not settled his tax problems. He once again made California’s list of the top 10 delinquent taxpayers, but this time it is reported that he now owes the state over $2.5 million.

2. Chris Tucker

Comedian and actor Chris Tucker became famous in the early 1990’s because of films such as "Friday,” "The Fifth Element," "House Party 3" "Money Talks," and the “Rush Hour” trilogy. In fact, for the third Rush Hour movie, Tucker was reportedly paid over $20 million, something only a few elite actors can claim. In addition to his films, Tucker is also known for being friends with other celebrities including Bill Clinton, Jackie Chan, and the late Michael Jackson.

Considering the fact that Tucker earned millions of dollars in the past decade, it surprised me to learn that he owes the State of California nearly $3.6 million in unpaid taxes. The state recently slapped Tucker with a lien for the debts stemming from the years 2001-2002 and 2004-2007. Unfortunately, little is known as to the reason for his tax delinquency since his publicist has refused to make any statements on the issue.

1. Nicolas Cage

Nicolas Cage took the number one spot on my list of the 5 biggest celebrity tax scandals for a number of reasons. First of all, he is probably one of the most famous actors to wind up in trouble with the IRS. He has appeared in dozens of hit movies including “Moonstruck" and "Lord of War", Ghost Rider." Most recently he was seen in the "National Treasure" films, which ironically featured a character that had to go back to work because of IRS tax debts.

Just a few weeks ago, the IRS issued a lien against Cage in the in Orleans District Court in Louisiana. The lien cited delinquent IRS tax liabilities from 2007 totaling over $6.2 million, which is higher than any other celebrity on my list. The address listed on the lien is Cage’s $3.55 million haunted mansion in New Orleans, which was initially built for French royalty. Unfortunately, Cage has not spoken out regarding his debt, so there are no details on whether he has attempted to settle with the IRS or not.

Settlement Near in UBS Tax Evasion Case

According to the Associated Press the U.S. and Swiss government are close to reaching a deal over recent allegations that American taxpayers were using accounts to avoid paying taxes on the funds. The Federal government had planned to take UBS (the largest Swiss bank) to trial, but a Florida judge has canceled the trial after word broke that negotiations between the governments had been fruitful.

Justice Department attorney Stuart Gibson said Friday in a conference call with the judge that major issues have been resolved. He did not disclose details.

U.S. District Judge Alan S. Gold agreed to cancel a trial that was supposed to begin Monday.

The dispute involves about 52,000 Americans the U.S. believes are hiding billions of dollars of assets in UBS accounts. The bank and Swiss government say the names cannot be disclosed without violating long-standing Swiss bank secrecy laws.

U.S. Secretary of State Hillary Clinton and Swiss Foreign Minister Micheline Calmy-Rey are scheduled to discuss the issue Friday in Washington.

Cage & Diamond: Two More Celebrity Tax Offenders

The IRS must be getting more aggressive in their collection of taxes from celebrities. Last week I made two posts about half a dozen new celebrities who had their tax delinquencies made public, and over the weekend two more offenders were identified.

Nicholas Cage

Cage, who ironically starred in a movie where unpaid taxes was a major part of the plotline (National Treasure: Book of Secrets), reportedly owes the IRS more then $6.2 million in unpaid taxes 2007. The IRS even issued a lien on Cage's $3.55 million haunted mansion in New Orleans.

Dustin Diamond

Saved by the Bell star Dustin Diamond has also been accused of neglecting to pay his taxes. According to gossip site TMZ, Diamond owes $21,015.62 in unpaid taxes to the state of Wisconsin. Apparently a lien was filed against his property, and the courts claim that no settlement has been reached.

Even More Celebrity Tax Evasion

Just the other day, I posted this entry about three new celebrities who owe taxes either to the IRS or the state of California. Now, according to new reports, another handful of famous taxpayers can be added to the list of celebrities with tax problems.

Steve Austin

Retired wrestler Steve Austin, known as “Stone Cold” Steve Austin to his fans, reportedly owes the State of California over $22,000 in unpaid taxes. The state even filed a lien against his property last month. Austin’s agent could not be reached for comment, so the reason for his tax debt is still unknown.

David Brenner

Famed comedian David Brenner owes the IRS a staggering $68,222 in delinquent taxes. Brenner, who filed for bankruptcy in 2004, does not deny that he owes the taxes, and states that he has already negotiated a payment plan to pay his debts off over time. When asked how he incurred the debt, Brenner jokingly explained, "I lost a bet that President Bush would learn how to pronounce the word 'nuclear,'"

Anna Kournikova

Although her total tax debts are less than the rest of the celebrities on the list, I was especially surprised to see that tennis star Anna Kournikova has tax problems with the state of California. Just last week the filed a $6,381 tax lien against her for unpaid tax debts. When reached, the athlete’s agent could not comment as to where the tax debt came from.

Lea Thompson

Lea Thompson, famous for her role playing Marty McFly’s Mom in the popular “Back to the Future” films probably wishes she could go back to the future and pay her taxes correctly. Earlier in the week it was revealed the actress owes $8,691 in unpaid state taxes.