News broke recently that Nicolas Cage is suing his business manager, Samuel J. Levin, for incompetence that caused him huge tax liabilities and "catastrophic financial losses."
Contributing to Cage's financial woes, the IRS has filed more than $6.3 million in liens against Cage for back taxes owed from 2002, 2004, and 2007. He is reportedly selling some properties to pay off the debt and going after Levin in retaliation.
But the "National Treasure" star isn't the first celebrity to owe big money to Uncle Sam. A few have even spent time behind bars for failing to pay taxes. Hopefully, Nic will avoid that fate and start building up his nest egg with the earnings from the four films he'll be starring in next year. In the meantime, maybe he can get a few tips from these celebrity tax evaders.
Chef extraordinaire and extreme screamer Gordon Ramsay made a bit of a donkey out of himself earlier this year when it was reported that he owed £7 million in back taxes. While that rumor has never been confirmed, Ramsay did admit to filing late because his restaurant empire was in financial ruin. Maybe if he had turned his "Kitchen Nightmare" skills inward, he would have advised himself not to overextend his resources by opening ten new eateries in ten months time. After an infusion of £5 million of his own hard-earned cash, Chef saved the company and paid off his debt.
Famed photographer Annie Leibovitz has been knee-deep in financial trouble lately, including a reported $1.5 million owed in back taxes. Over the past year, Annie has borrowed $24 million from the New York-based loan company Art Capital Group after she found herself facing massive debt due to back taxes, unpaid mortgages, and money owed to vendors. In return for the cash infusion, Leibovitz provided collateral in the form of her homes and the copyrights to ALL of her photography, including such iconic images as the John and Yoko Rolling Stone cover. In July, Art Capital sued Annie for breach of contract, but the dispute was eventually settled in this fall. The company extended her loan and sold back to her the rights to her artwork. The saddest thing is that Leibovitz reportedly got into this mess over what is being called the "gay tax." When her partner, author and activist Susan Sontag, died several years ago, Annie was faced with huge inheritance taxes, sending her into financial ruin. If the pair had been allowed to legally marry, Annie would not have owed any such taxes and her priceless artwork would never have been in jeopardy.
In April 2008, Wesley Snipes was sentenced to three years in prison for failing to file Federal income tax returns. That's better than the 16 he faced if he'd also been found guilty of conspiracy to defraud the government and filing a false tax claim. He was acquitted of those charges, but Snipes must pay $17 million in back taxes, plus penalties and interest. So far, the "Blade" star remains free on bail while he appeals the verdict, but last spring he was ordered to surrender his passport after taking an unauthorized trip to Dubai for a lavish hotel opening. And if all that weren't enough for poor Wesley, news broke just a few weeks back that he might be a victim of the latest Ponzi scheme carried out by a British investment firm that allegedly stole more than $400 million from 3,000 investors. Seems like a case of really bad karma to us.
Just a few months after winning "Dancing with the Stars" in the fall of 2007, Brazilian Indy 500 champ Helio Castroneves was charged with tax evasion. In October 2008, he pleaded not guilty to the accusations that he used offshore accounts to avoid paying taxes on the income he earned from a $15 million Penske licensing deal. If he'd been convicted, Helio could have spent six years in prison. But he was acquitted of all charges last spring and went on to win his third Indy 500 a few weeks later. This past August, Castroneves walked into the IRS office in Miami and handed over a check for $5 million to settle his debt. And as a footnote to his very rocky year, Helio walked away from a crash at the Homestead-Miami Speedway earlier this month and just last week announced that he and his girlfriend, Adriana, are expecting a baby in January. At least that will give him a new tax write-off.
In 2007, California state officials released a list of their worst tax offenders. O.J. Simpson, no stranger to legal problems, was pretty high up, with a debt of $1.44 million, dating back to 1996. Simpson tried to wiggle out of it by saying that he was a Florida resident, but the Juice didn't move there until after this debt was incurred. In yet one more example of O.J. being able to evade responsibility, he will not be held accountable for the back taxes, since he is now in a Nevada prison on a robbery and kidnapping conviction and will be unlikely to earn that kind of money any time within the next 33 years. That's one way to get out of paying taxes.
In 2007, Jennifer Lopez and the rest of the world learned that her husband, salsa singer Marc Anthony, had not paid his taxes from 2000 to 2004. He'd been ordered to pay $2.5 million in back taxes on the $15.5 million he'd earned during that time. Anthony was never charged with any crime because the courts believed his explanation that he'd hired a business management company to handle his taxes and was unaware he owed any money. He paid the debt and got off scot-free. But his crackpot financial team (including his own brother, Bigram Zayas) was not so lucky. They all pleaded guilty to tax felonies.
The winner of the first season of "Survivor" outwitted, outlasted, and outplayed his fellow tribe members, but he did not outsmart the IRS. After winning $1 million on the island reality contest show, Richard Hatch never reported the income to Uncle Sam. He claims CBS was supposed to cover his taxes, while they assert that there was no such deal. The government threw the naked reality contestant into the slammer for 51 months. He was released to home confinement in May but was re-arrested in August after breaking the terms of his parole by conducting TV interviews. Hatch became a (sort of) free man just last week when he finished his sentence, and he will now begin the three-year supervised release portion of his punishment.
In 2002, after a ten-year investigation, tennis great Boris Becker was convicted of tax evasion in Germany. The former Wimbledon champion was sentenced to two years probation and was ordered to pay 3 million euros in back taxes and another 500,000 euros in fines and charitable contributions. It seems that from 1991 to 1993, Boris claimed he was living in the tax haven of Monaco and so did not pay taxes in Germany. However, the German government maintained that the apartment he held in Munich was his primary residence and that he needed to pay up. A few months later, Boris paid the fines and moved permanently to Switzerland.
Cowboy hippie and outlaw country singer Willie Nelson may show his patriotic side by wearing red, white, and blue bandanas, but he got in a heap of trouble with the IRS in 1990 when they slapped him with a $16.7 million bill for back taxes. Willie did what any red-blooded American singer would do: he recorded an album. All of the proceeds from "The IRS Tapes: Who'll Buy My Memories?" went directly to Uncle Sam to pay off the debt. The government also held an auction to sell most of his possessions (though his friends bought a lot of them and gave them back to him) to reclaim the rest of what they were owed. Willie sued his accounting firm and settled for an undisclosed amount, and his debt was all paid off three years later.
In 1990, baseball legend Pete Rose was charged with filing false income tax returns. He pleaded guilty, admitting to not claiming his earnings from signing autographs, selling memorabilia, and betting on horse races. We'd also like to add that he most likely never claimed his winnings from all those years of gambling on major league baseball games. Rose served five months in prison, paid $366,000 in debt, and did 1,000 hours of community service as punishment for tax fraud. He was kicked out of MLB for good and lost his reputation as a baseball great over the gambling charges.
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