Thursday, June 19, 2014

13 infamous tax cheaters

It's that time of year. Many folks are scheduling appointments with their accountants and collecting all the documents for the Internal Revenue Service. Or not.

The temptation to omit numbers and cut corners has led many a taxpayer down the dark road of tax evasion year after year. Who hasn't wondered if maybe the IRS won't notice if you fail to report a gain here or forget to file some income there.

But celebrities and the not-so-famous alike have found out the hard way what can become of playing games with the IRS.

Some tax cheats have claimed that the price of becoming too rich and too high-profile garnered unwanted and undue attention to their finances. Surely, that's true. Then again, some taxpayers cheated the IRS deliberately and repeatedly -- until they got caught.

While a list of those who have yet to be found out might be more interesting, here's a roundup of some of the more famous people who ended up on the wrong side of the IRS.

Darryl Strawberry

On Feb. 9, 1995, the former New York Mets outfielder pleaded guilty to a single count of tax evasion and was sentenced to three months in prison and three months of house arrest. He acknowledged that he had not paid more than $100,000 in owed federal taxes after knowingly failing to report more than $350,000 in income from autograph shows and other promotional appearances from 1986 to 1990. He was originally indicted on three counts of evasion and conspiracy.

Pete Rose

The former Cincinnati Red star and manager pleaded guilty to two charges of filing false income tax returns in April 20, 1990, and he was sentenced to five months in prison and fined $50,000. In 2003, USA Today reported that Rose was hit again for problems with his 1997 and 1998 income tax filings, for which he consequently owed more than $154,000 total.

Lindsey Vonn

The IRS filed a $1.7 million tax lien against the World Cup champion skier and her estranged husband, Thomas Vonn, on April 2, 2012. She responded quickly and! announced via Facebook that the lien was paid off before the end of that month. She claimed to be completely unaware of how her taxes were being managed. She said, "Not being in control of my finances and relying on someone else who you believed had your best interest at heart was a mistake and one I will not make twice."

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Martha Stewart

Before the home and garden guru was sentenced to prison for insider trading in 2004, she was forced to pay $220,000 in back property taxes and penalties to the State of New York for her home there. She tried claiming that she didn't owe taxes on the property because she didn't spend much time there.

Wesley Snipes

In 2008, the actor was convicted of three misdemeanor counts for failing to file tax returns from 1999 to 2001, cheating the government out of $7 million. He appealed for retrial and lost in 2010, which resulted in a three-year sentence at a McKean Federal Correctional Institution in Pennsylvania, where he was housed with about 290 white-collar inmates. He moved from prison to house arrest in April 2013.

Willie Nelson

After an investigation, the IRS slapped the country singer with a $16.7 million bill for back taxes, which his lawyer managed to negotiate down to $6 million. Because he lacked the funds to pay off the debt, Nelson spent three years working to pay it off. He recorded the album, The IRS Tapes: Who'll Buy My Memories?, which was sold for the sole purpose of paying his IRS debt. The money collected from suing his accountant also went toward the cause.

Al Capone

The Chicago gangster managed to avoid the feds until 1931, when he was indicted and found guilty of five counts of income tax evasion. After failing to bribe those involved in his hearing, he was sentenced to 11 years in prison and heavily fined. One of his prison terms was spent in the then-new Alcatraz prison.

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Willia! m "Bud" Abbott and Lou Costello

The comic duo of "Who's On First?" fame split up and became bankrupt when the IRS charged the two for so much in back taxes in 1956 that they had to sell their homes and the rights to many of their films.

Jesse Jackson Jr.

The former Representative (D–IL) pled guilty on Feb. 20, 2013 for fraudulently obtaining $750,000 of funds from his election campaign, and his wife, Sandra Jackson, pled guilty to one count of tax fraud for covering up the receipt of those funds from 2006 to 2011. Jesse was sentenced to 30 months in prison, while his wife was sentenced to one year.

Tom Daschle

The former Democratic senator from South Dakota "unintentionally" failed to pay taxes on the free use of a car and driver for several years, for which he paid $128,203 in back taxes and $11,964 in interest in January 2009. He said that he had become aware in 2008 of the fact that the service valued at more than $250,000 over three years.

Leona Helmsley

The businesswoman and real estate tycoon was convicted of evading $1.2 million in taxes in 1989, for which she was fined $7.1 million on top of the $1.7 million owed in back taxes. She served 18 months in federal prison, one month in a halfway house and two months on house arrest. During her trial, many of Helmsley's disgruntled hotel employees testified against her. One former housekeeper said she overheard the "queen of mean" say, "We don't pay taxes. Only the little people pay taxes."

Ty Warner

The billionaire creator of Beanie Babies toys was sentenced to two years' probation, 500 hours of community service and a $100,000 fine on top of paying a $53 million civil penalty and about $27 million in back taxes on Jan. 14, 2014, for evading taxes on a gross income of more than $24 million, which was hidden in Swiss bank accounts. The tax evasion charge he received carried a maximum penalty of five years in prison with a $250,000 fine, but the judge did not sentence Warner to prison, saying that! it was b! est to allow him to "continue his good works."

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