The tale of the celebrity who doesn't pay his or her taxes is one of the oldest in Hollywood.
For as often as this occurs, hearing about a celebrity not paying their taxes is always a bit surprising. The news broke last week that R&B singer, R. Kelly owes the IRS $5 million for taxes that have gone unpaid since 2005. This came only a week after news of Lauren Hill being charged with failing to file tax return for 2005-2007. Many of these celebrities make more money on one album or one advertisement than most of us will see in our lifetimes – so what's the problem?
In most cases it comes down to poor financial planning and hiring the wrong people to handle their financial responsibilities. Celebrities are known to have several assistants and advisors to help them juggle their busy lives and sometimes they hire the wrong people to do the job. Ozzy and Sharon Osbourne had such a problem recently. Back in April they found out that they owed as much as $1.7 million. Sharon Tweeted after "You can't rely on anyone but yourself.....my fault.....lessoned learned." Celebrities don't have some sort of penchant for finding crooked tax advisors, but often times they do hire friends and other people from within their social circles who tell them only what they want to hear. These kinds of decisions can backfire immensely.
When celebrities get paid, they don't have taxes automatically deducted from their check like typical wage earners. So when tax time rolls around, they can end up owing huge sums of money. This shouldn't be a problem for people who make $10 million for one movie, but when you get that money in one large lump sum instead of every week or month, you can go through it rather quickly without noticing. A good example would be someone winning the lottery or hitting it big at a casino and then spending it all as quickly as they got it. Many Americans would do the same thing if caught in a similar situation
Taxpayers or any kind, not just celebrities, have several chances to challenge tax allegations made against them. Only when they do not respond to the IRS's notices that things get nasty and often times expensive. The IRS likes to make examples out of celebrities, because they are in the public eye.
***Bryson Law Firm, LLC is a Louisiana law firm focusing 100% of our practice on helping people and businesses solve their IRS and Louisiana state tax problems. We have offices in Lafayette, Baton Rouge, and Shreveport.
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