Earning millions of dollars comes with the temptation to spend elaborately, and all those purchases are difficult to account for come tax time. What should you write off, and what forms should you use?
Many celebrities avoid the hassle by simply refusing to deal with the IRS. They may also get unhelpful advice about how to handle the situation.
Getting caught in illegal filing can be a major drain, even for the Hollywood elite. The more you earn, the riskier it is to try to hide it from the government.
Keep watching to learn about celebrity tax evasion cases that left them flat-out broke.
The 2000s were a terrible decade for Nicolas Cage. His extravagant purchases, including castles, yachts, a dinosaur skull, and even a private island finally caught up with him. He’d been illegally writing off $600,00 of these personal expenses.
The IRS wasn’t having it. He admitted in an interview with People that he’d paid over $70 million in back taxes throughout his career but, due to a “recent legal situation,” owed $14 million more.
There was a $6.3 million tax lien placed on his real estate from 2002-2004 and an additional lien of $6.7 on his 2008 tax bill. He sued his accountant, blaming him for his financial ruin, and they settled out of court. He had to act in a string of terrible straight-to-DVD films to keep in the red and finally paid off his debts by 2020.
American businesswoman Leona Hemsley was dubbed New York’s Queen of Mean. She let everyone know what she thought or had done, even if it was criminal.
She said bluntly to the New York Times that “only the little people pay taxes.” She was found not paying $1.2 million and fined an additional $7.1 million. It earned her 18 months in prison plus two months of house arrest on a 16-year sentence.
Martha failed to pay $220,000 in taxes on her home in New York, claiming she “didint’ spend much time there.” That was only the first of her run-ins with the police caused by trying to keep the money she’d earned in her massive empire.
In 2004, Martha also lied to federal investigators about her deal with the pharmaceutical company ImClone Systems. She said they agreed to sell her shares if the price ever went below $60. There was never any such agreement, and she sold 4000 shares worth $228,000. They couldn’t prove it was insider trading, but her lies got her 18 months in jail.
The most difficult part of the entire incident was rebuilding her brand. Paying over $220,000 in back taxes was nothing compared to convincing the public that she could be trusted again.
Al was one of the most famous gangsters in the world. The police had been after him for years, but, other than a few contempt of court or concealed weapons charges, he’d always evaded their grasp for serious crimes. He was in Florida and gained plausible deniability during the Valentine’s Day Massacre in Chicago.
They couldn’t nail him down until he became involved in one of the most famous cases of celebrity tax evasion. He’d been refusing to pay on his substantial income and used the money to live high.
In 1931, five counts of tax evasion for a total of $215,000 earned him 11 years in prison. He only served seven and a half and never returned to his empire because his brain was riddled with syphilis.
Willie was a charitable man who often held live concerts to support worthy causes, such as the famous Farm Aid. In the 1990s, a strange twist of fate came about where he was the one in need of help.
The IRS slapped him with a bill of over $16.7 million in back taxes. His accountants hadn’t been paying it for many years, and he was in severe debt.
He did everything he could to raise the money, including giving them part of the sales from an album titled The IRS Tapes: Who Will Buy My Memories? He also had to sell off many of his favorite possessions that the government didn’t seize, but a few of his friends bought and returned them to him.
His debt was negotiated down to $6 million. He couldn’t pay that either and lost everything when the IRS raided his home. Only his favorite guitar Trigger was saved because it was in the hands of his daughter.
O.J. has been famous for many things. First, he was known as the USC all-time leading rusher. Then, he was known for being on an informal most-wanted list. Eventually, he made it on another list; California’s most delinquent taxpayers.
OJ owed over $1.4 million in back taxes. Unlike many others, it wasn’t the result of poor financial advice. He hid the money in pension and bank accounts in other countries and borrowed against his assets to protect them from creditors. He hasn’t paid on them yet because he’s sitting in Nevada’s Lovelock Detention Center for kidnapping and armed robbery. That landed him on another list: the most famous legal cases and arrests of all time.
The player who holds the record for career hits was banned from baseball and the Hall of Fame thanks to tax evasion. He was betting on sports while managing the Reds and failed to report any of those winnings to the IRS. He also didn’t include any earnings for personal appearances or autographs. He ended up with five months in jail, 1,000 hours of community service, and a $50,000 fine.
He went up against the IRS again in 2003 due to back taxes. That time was a bit simpler for him because he had enough money to pay the $154,000 lien. He didn’t have to sell possessions such as his million-dollar condo like he did the first time.
Judy Garland had a life full of tragedy, including tax evasion troubles. 15 years spanned between her breakout role in The Wizard of Oz and her other major hit A Star is Born.
Judy engaged in a bit of retail therapy with the earnings from both and racked up a tax bill she couldn’t repay. A weekly TV show seemed like it could save her and be “the biggest talent deal in history.” It was a flop and canceled after only one season.
The IRS had to seize Judy’s home. She had no choice but to bounce between hotels until her death of an accidental overdose on June 22, 1969.
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Abbot and Costello
William Bud Abbot and Lou Costello were one of the most beloved comedy duos in the 1940s and 50s, but the tax bill they raked up wasn’t funny. They had so much to pay that they had to declare bankruptcy. They were even forced to sell the rights to all their films.
While he may not be the most famous name in celebrity tax evasion cases, Walter Anderson’s is the largest. He became a millionaire after the breakup of AT&T but failed to report his earnings.
It’s reported that he evaded over $200 million. In 1998, he only paid $495 on $67,939 of income despite allegedly earning $126 million that year alone. He tried to hide it through offshore corporations but was eventually sentenced to nine years in prison.
Richard won $1 million in the first year of the reality TV show Survivor. He received a Form 1099-MISC to fill out about his winnings but failed to pay anything on them. He also didn’t pay anything on his other earnings thanks to the “celebrity” status he gained from the show.
Richard was convicted in federal court. He went to prison for 51 months and paid fines and fees of over $300,000.
A stay in the slammer didn’t teach him his lesson. He failed to pay his taxes two years later and got another nine months.
Wesley Snipes allegedly got into tax trouble because his advisors told him he didn’t have to pay taxes from 1999-2001. He ended up with $7 million in debt.
He had to serve 36 months in prison. That included 28 months at the McKean Federal Correctional Institution in Pennsylvania and the rest in house arrest.
2018 was one of many expensive years for actress Courtney Love thanks to a tax lien of $568,674.62. She’d settled other bills, including $320,000 in 2012 and $266,00 in 2009 and 2011.
Courtney appeared on the list of California’s top 500 delinquent taxpayers in 2021 and allegedly owed $357,20.94. That number went up to $2.5 million by 2021, but her rep said it had been resolved. She admitted that she struggled with overspending and addiction.
This Latin superstar got caught with tax evasion twice. He had a $2.5 million lien for four years of failure to pay in 2007. Three years later, he failed to pay $3.4 million in back taxes, and the lien moved to his home in Long Island.
The entire Osborne family has faced tax evasion charges. Sharon and Ozzy were charged $1.8 million in back taxes from 2008-2009. A lien was placed on their home, but they paid it off in a week. Their daughter Kelly got a past-due bill for $34,763.30 in 2009.
This famous singer and American Idol judge has a net worth of over $200 million. That didn’t keep him from getting a $1 million tax lien for failing to pay taxes in 2010.
2010 was one of the worst years of this woman’s life. She got divorced and had a DUI. That was followed up by learning she owed the IRS $637,000 in federal and state taxes.
The Rush Hour franchise made this actor a star, but it didn’t prevent his financial problems. He failed to pay taxes in 2001, 2002, 2004, 2005, and 2006, accruing a debt of $11.5 million. He also got another tax lien of $600,000 in 2012. The IRS sued him in 2021 for $9.6 million in back taxes, penalties, and fees.
The IRS wouldn’t forgive the founder of Girls Gone Wild for his tax evasion. He was indicted on two counts of over $20 million in false deductions. He blamed his accountant at first but eventually plead guilty.
He paid $250,000 in 2009. He also spent 301 days in prison with a year of probation.
What’s the biggest celebrity court case you can think of? Let us know in the comments.