The tax man comes for everyone, even people who are wealthy and famous. In fact, despite having more money that most people in the country, the rich and famous run afoul of the IRS just as often as everyday people. Hollywood heavyweights must follow the U.S. tax codes just like everyone else and sometimes find themselves being audited for violating U.S. tax codes.
Celebrities Who Have Been Audited
Donald Trump recently stated in an interview that his personal and business returns are audited every year by the IRS. Indeed, it is true that he faces intense scrutiny of his tax records yearly because of the amount of money that he makes and also because of the financial enormity of the transactions that take place in his name.
However, Trump is not the only rich and famous person who has ever faced the IRS' scrutiny. Within the last two decades, he has been joined by the likes of:
- Rapper/singer R. Kelly
- Actress and R&B singer Lauryn Hill
- Olympic skier Lindsey Vonn
- Actor Stephen Baldwin
- Actress Lindsay Lohan
- Rapper Ja Rule
- Rapper Lil' Wayne
- Comedian Katt Williams
- Singer Lionel Ritchie
Given the amount of money and fame these people have, you may wonder how it was possible that they got behind on their taxes or ran afoul of the IRS in the first place. These celebrities, just like everyday people, can risk an audit by failing to observe common U.S. tax codes. These tax codes must be obeyed if taxpayers want to avoid owing more money or facing civil or criminal penalties.
Paying on Time
Many people know that the IRS expects that your taxes be filed and submitted by April 15 or the next business day thereafter if the 15th falls on a weekend. However, failing to file on time stands out as one of the most common infractions for why people get audited or penalized.While many celebrities have accountants or lawyers who file their taxes for them, others forget to file or believe that they are exempt from this rule. This infraction can lead to expensive fines and penalties and also more significant punishments if celebrities fail to pay those civil punishments.
Paying Every Year
Many people also know that the IRS expects taxpayers to file and pay their taxes every year. Unfortunately, some celebrities forget this mandate and skip filing returns for a few years.For example, R. Kelly neglected to file his returns for a period of five years. By the time the IRS caught up with him, he owed more than $4 million in principle, penalties, and interest.
Reporting All Income
Along with filing every year on time, people also must report all income that they have earned that year. Some celebrities, such as Lauryn Hill, neglect to report all of their money and find themselves in front of an IRS auditor.Because celebrities make different amounts of money from year to year, it can be difficult for them to know for sure how much they made and how much they must report. Nonetheless, they are obligated to report their incomes honestly, regardless of how it fluctuates every year.
Knowing Current U.S. Tax Codes
Famous people who work and make incomes in several different countries each year may get the current U.S. tax codes confused with other countries' tax laws. Failing to observe tax codes stands out for one of the many reasons that Hollywood heavyweights find themselves in hot water with the IRS. Some famous people avoid this infraction by hiring attorneys or accountants in the U.S. to handle their tax returns for them.
Famous people, just like everyday taxpayers, are susceptible to being audited by the IRS for failing to comply with all of the country's tax laws. People can learn from these celebrities that it pays to report all income on time and to file taxes every year. It also may pay people who have difficulties remembering current tax codes to rely on professional tax guidance when filing and submitting their returns.
