Celebrity Tax Troubles and What They Can Teach Us: Part I
In June, we wrote about the tax troubles of actress Melissa Gilbert. In comments to the press, Gilbert noted that her tax debt was caused by a “perfect storm” of circumstances that included divorce and a slowdown in her career. Life happens to all of us, and her problems are fairly relatable.
Gilbert is certainly not the first or only celebrity to be in trouble with the IRS. And although celebrity tax issues are often seen as fodder for gossip magazines, there are valuable lessons the rest of us can learn from hearing these stories. These lessons are what we’ll be discussing in our next two posts.
Paying taxes is not optional
This may seem obvious, but there are some people who believe that they should not have to pay taxes. Perhaps the most conspicuous example is actor Wesley Snipes. His intentional failure to file returns for three consecutive years totaled about $7 million in lost IRS revenue.
Although Snipes was happy to debate the issue of citizen tax liability with IRS, the agency was less interested in his arguments. After being convicted of tax evasion, Snipes spent three years in prison.
Forgetting to file a tax return is not a valid excuse
Way back in 1974, comedian Richard Pryor learned this lesson the hard way. He claimed to have forgotten to file his return, but a judge was unsympathetic. Pryor served 10 days in jail and had to pay a fine.
The IRS actually makes it pretty easy to get a six-month extension if you can’t file by April 15. That being said, you must apply for the extension before the deadline. If you forget to file for some reason, the IRS recommends getting it done as soon as possible in order to minimize consequences.
Please check back next week as we continue our discussion.
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