The Top 20 of 2010 - Celebrities Who Owe the IRS

Examiner.com put together a list of 20 celebrities who found themselves in debt to the IRS last year. I've included the top 5 below, but you can check out the full article at Examiner.com.

For all the money they earn, you’d think they could buy better accountants…

5. Wesley Snipes

Although not the largest of the IRS celebrity debtors, perhaps none are as well known for such storied tax problems as the Blade star Wesley Snipes. Snipes fell into a trap that many taxpayers unfortunately get involved with – tax evasion. Snipes lost an appeal over the summer and is currently in jail for failing to report income earned to the IRS. He currently has a $2.7 million tax bill, and is serving 3 years at the minimum security Federal Prison Camp in Bradford, Pennsylvania.

4. Marc Anthony

The 41-year-old singer, who married Jennifer Lopez in 2004, was recently hit with a tax lien after reportedly owing $3.4 million to the IRS. Love may not cost a thing for Jennifer Lopez, but having a spouse who's a tax scofflaw sure sounds expensive. To be fair, Anthony just announced this year that he has ‘settled’ his tax debt with the IRS.

3. Chris Tucker

Chris Tucker, known best for his role as ‘James Carter’ in the three Rush Hour movies, was identified by the IRS as owing $11.5 million in delinquent tax debt from tax years 2001, 2002, 2004 – 2006. For his roles in Rush Hour, Tucker was reported to have earned $20 - $25 million per movie. It’s easy to earn that much when you don’t pay your taxes.

2. Nicolas Cage

Here’s a refreshing change – a celeb that admits the balance and is doing something about it. When you owe $14 million to the IRS, you certainly can’t just sit on your treasure chests. Cage told People magazine last year that he is “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."

1. Joe Francis

The number one IRS nonpayer on the list shows that the cliché is true – sex does sell. The owner of the Girls Gone Wild franchise owes a whopping $30 million to the IRS, after he allegedly fell behind with payments in 2001, 2002 and 2003. Maybe he should ask some of his drunk and topless girls to lend him some cash – now that would be a classy move.

Full list here

Trick Daddy in Debt to the IRS for More than $157K

According to new reports, Miami rapper Trick Daddy has gotten behind on his taxes. The musician apparently owes the IRS over a hundred and fifty thousand dollars.

Trick Daddy (real name: Maurice Young) reportedly had his Miami home foreclosed on it May, and sold off months later in October. And now, he reports owes the IRS more than $157,00 in delinquent federal taxes.

The government agency placed several liens against Trick and his wife over the past summer, amounting to $85,366 for money earned from 2007-09, $16,709 for 2006, and $53,979 for unpaid income taxes owed in 2002.

He's not alone though. Over the past year, the IRS places liens against several other high-profile musicians, including Doug E. Fresh, Kelly Rowland, Omarion, Nas, Wyclef Jean, and Swizz Beatz, among others.

Read more here

Val Kilmer Facing 'Heat' from Feds

According to reports, the Santa Fe County Clerk has filed an IRS lien against cater Val Kilmer for $498,165, and listed on the lien is his Pecos River Ranch.

DETnews.com reports:

Actor Val Kilmer is having a hard time selling his 6,000-acre ranch in New Mexico and a harder time shaking the IRS. The "MacGruber" and "Kiss Kiss Bang Bang" star owes almost $500,000 in delinquent federal taxes, according to public records.

The new tax lien was filed in November, seven months after the IRS released a $538,858 tax debt.

The 50-year-old Juilliard-trained star was in Detroit last year shooting scenes for "Kill the Irishman" with co-star Christopher Walken. Filming locations included Corktown, the Cass Corridor, Roma Cafe in Eastern Market and the ruins of Tiger Stadium.

His latest flick, "Gun," was shot in Grand Rapids, where co-star 50 Cent recently introduced the movie during a red-carpet premiere.

Read more here

Bankruptcy and IRS Tax Debt

It is not uncommon that the people who come to me for back tax help have already deeply considered filing for bankruptcy. It is common to wonder if bankruptcy will solve all debt issues, including an IRS bill. The answer is: Well, sometimes bankruptcy will, but it all depends. (How’s that for a lawyer’s answer?) In any case, you must be careful because while bankruptcy might stop the IRS from filing a tax lien or pursuing collection activities, in most cases, penalties and interest are still accruing! Also, bankruptcy extends the amount of time the IRS has to collect on your debt—tax law normally limits the IRS to 10 years to collect against you. So all in all, after bankruptcy, your IRS tax debt may still be lurking around—and may even have more zeros tacked on.

The type of bankruptcy you file is a factor in whether or not your tax debt will be “discharged”. There are so many rules and exceptions when it comes to bankruptcy and unpaid tax debts. I recommend that if this is something you are considering that you talk to a professional—do not attempt to do this on your own.

For more information, check out this article I recently read on the topic of bankruptcy and taxes: http://bit.ly/dvn5h9.

Snoop Dogg and Eve Owe Uncle Sam

Hip-hop artists Snoop Dogg and Eve have both reportedly joined the ever growing list of celebrities who owe tax debts to the IRS. According to DT News, the IRS “filed a $598,309 tax lien against Snoop Dogg last month. The new debt dwarfs a tax lien filed last year against the 38-year-old rapper, who showed up all over Detroit during the 2006 Super Bowl, holding a private concert and attending the game. He also was one of the headliners at the Rothbury Music and Art Festival in 2008.”

Just last week it was also reported that Eve “owes in excess of $357,000 in back state and federal taxes.”

• In January 2008, the IRS in LA filed two liens against her, one for $242,245 and another for $56,597.

• In January 2009, that same branch filed two additional liens against Eve, one for $29,439 and other for $29,059.

Missed the Quarterly Payment Due Date?

Although the estimated quarterly tax system was made to make taxes simpler for business owners and self employed taxpayers, sometimes it seems like they do just the opposite. The economy is making life more difficult on millions of Americans, and it can be very easy to miss an estimated quarterly due date. For those of you who may have missed last week’s June 15 deadline, I’ve put together the following article explaining what you can do.

Do Not Worry

First of all, do not worry. If you miss the quarterly payment by a few days then the IRS probably will not assess any penalties or fees, but you should still get your payment in the mail as soon as possible. The IRS’s main concern is that they get their money, and as long as you get yours to them within a couple of days then you should be fine.

Do Not Wait

Although some people will tell you it’s fine to just include more money in your next quarterly payment, this option can have serious consequences. The IRS wants self-employed taxpayers to make regular quarterly payments, and can enforce heavy fines if you wait. Unless you did not have any profit this quarter then you want to get your payment mailed out ASAP.

Get Professional Help

Calculating your own estimated payments is actually pretty simple—see The Truth About Estimated Quarterly Tax Payments on the RDTC Tax Help Blog—but if you are confused then you might want to seek out professional help. Not all tax preparation offices are open year round, so you might need to find an accountant. Additionally, most Roni Deutch Tax Center franchises are open year round and can help with estimated payments. To find a store close to you, check out the Locations Page on RDTC.com.

If You Need Time

If you cannot afford your entire tax payment right away right away then you can take another route. One common option is to simply pay by credit card. That way you take care of your tax liability with the IRS, and pay off your credit card balance whenever it is most convenient for you. You could also just pay what you can now, and pay the rest over time as you can. If the IRS sees you are making steady payments on the total, they are probably not going to penalize you much, if at all.

Confusing Dates

The name "quarterly payments" has misled more than one taxpayer. Since they are quarterly, it would be correct to assume you need to pay every three months right? Wrong. There is actually only a two month space between the April 15^th, and June 15^th due date. Later in the year you also have a four month quarter to make up for the reduced spring time quarter.

Avoiding Missed Payments

There are several ways you can make sure you do not make this mistake again. Put the due dates (April 15th, June 15th, September 15th, and January 15th) in as many places as you need to in order to remember. This can include your calendar, planner, iCal, a date book, or even a sticky note on your desk. You may even be able to set an alert on your cell telephone months ahead of time.

Take It To The Limit: IRS Statute of Limitations

Nearly every day, my law firm receives calls from people who are terrified of IRS collection activities, but don’t realize that their debt has expired. On the other hand, similar calls from people who thought their tax debt expired only to find that their wages are being garnished.

As you may know, the IRS has 10 years to collect on a taxpayer’s tax liability. The clock starts running from the date of assessment, which means the date the return was processed and an amount due was calculated for the tax return. Sounds easy enough, right? Well, like most things involving the IRS there are always exceptions. The IRS calls these exceptions “special circumstances.” And there are a few special circumstances that can extend the statute of limitations on a tax liability.

Bankruptcy which is either incomplete, or if the tax liability was not discharged. While your case is pending, the statute extends accordingly. If your bankruptcy agreement does not include your tax liability, those expiration dates keep getting pushed out.

Filing an Offer in Compromise. Yes, just the act of filing an OIC will extend a tax liability’s statute of limitations during the process. Of course, an accepted and completed OIC will resolve the debt.

Signing Form 900 Waiver, allowing the government additional time to collect. Why would anyone sign this document? Well, sometimes the IRS tells taxpayers they must sign it in order to enter into an installment agreement or other negotiations. Of course, they can not actually force you to sign the document, which is why asking for professional help in IRS negotiations can be beneficial.

Important to keep in mind, the statute of limitations begins running on the tax liability’s date of assessment. Which is when an IRS official actually signs off on your return. So, if you file your 2005 tax return in 2008, the liability won’t expire until 2018. This should be an enticement to file your returns on time, even if you can not pay your full liability. The earlier taxes are assessed, the sooner they will expire.

How do you find out when your debt will expire? You need to request a Record of Accounts from the IRS for each year you owe. Of course this will be a lot of paperwork, and it will be written in the classically difficult to understand IRS language. But the inconvenience can be worth if for taxpayers with particularly old debt. If you find you only have a few months left for the IRS to collect, you can simply ride it out and hope the IRS does not take any further action against you.

Sometimes an impending debt expiration can work in your favor, enticing the IRS to accept an Offer in Compromise. They would rather get some of their money than risk collecting nothing at all.

The IRS is not under any obligation to notify taxpayers that their debt is no longer collectible. So, many taxpayers live in fear of collection activity that will never come. Sounds pretty stressful. Sometimes, the IRS forgets to release a tax lien against your property, even after the debt expires, tarnishing a taxpayer’s credit. These are all reasons to get informed and be your own advocate. If you are not comfortable contacting the IRS, find a CPA or a tax attorney with experience in IRS negotiations and let them deal with all the bureaucracy.

City Wants her Cent

From the Sun Chronicle:

A 74-year-old blind woman has been told a lien will be put on her South Attleboro home if she doesn't come up with a penny she owes on an outstanding utility bill.

Eileen Wilbur, of Glenn Street, said she discovered the notice of the potential lien after her daughter, Rose Brederson, came over to read her mail.

"It's so upsetting," Wilbur said. "It sent my blood pressure up so high."

The city sent Wilbur a letter dated Nov. 10 stating that if the 1 cent balance is not paid by Dec. 10, the city will assess a lien of up to $48 on Wilbur's next property tax bill.

"They wasted taxpayer money on the letter," Wilbur said, noting the 42-cent charge for a stamp.

City Collector Debora Marcoccio said the bill was sent out along with more than 2,000 others as the city tries to recoup outstanding balances before resorting to putting liens on property.

A computer automatically printed the letters for any account with a balance remaining, and they were not reviewed by staff before being sent out, Marcoccio said.

"It would be fiscally irresponsible for me to have staff weed through the bills and pull out any below a certain amount," Marcoccio said. " And what would that amount be?"