As difficult as it may be for Americans to believe, celebrities are really just human beings. In the U.S., with our glorification of Hollywood, of athletes, of musicians and entertainers of all sorts, we tend to place celebrities on a pedestal and view them as nearly superhuman when compared with the normal citizens who make up the bulk of our society. Might they have problems? Certainly, but whatever problems they might have, they aren’t anything that a superhuman couldn’t easily handle without breaking a sweat. We see celebrities as being basically above the hassles, headaches and pesky issues which torment the lives of more ordinary human beings. This view, however, is quite far removed from the truth. In this post we’ll take a look at several celebrity tax headaches.
The real truth is that not only do celebrities have just as many problems, in many cases they have problems which are far greater and far more consequential than non-celebrities. Many, many publicly recognizable personalities have gotten into trouble with the IRS, for instance, and quite a few celebrities have had to significantly alter the course of their careers because of such trouble. In this post, we will introduce several prominent figures who have had significant issues with taxes at some point in the past and then discuss how their issues were resolved. Sometimes, being a celebrity means being burdened with troubles which are actually more severe and more draining than those which burden most people.
Celebrity Tax Poster Child Nicolas Cage
Along with roles in prominent, blockbuster films such as National Treasure and Con Air, Nicolas Cage may very well be equally remembered for his extreme spending habits. In fact, Cage can arguably be called the poster child for celebrity tax troubles. At one point, Cage was among the highest paid actors in Hollywood, and throughout his career, he’s spent his earnings on a host of luxurious homes and expensive acquisitions. Many of his purchases were seldom used and often lacked any functional purpose, such as the dinosaur skull he purchased for $276,000. The actor has been saddled with multiple tax liens and hefty tax bills, and on many occasions he’s taken acting jobs to cover these costs. At one point, in 2012, Cage owed as much as $13 million in back taxes, but he’s gradually paid down this massive debt with various payments. He made a lump sum payment of over $6 million in 2012, for instance, thereby slashed his existing bill nearly in half; this payment was preceded by a much smaller payment of approximately $360,000 and was made to cover back taxes from the early 2000s.
Though he’s been hit with plenty of financial blows by the IRS, Cage’s reckless spending doesn’t seem to have subsided and he continues to take roles to chip away at his bills.
Yet another celebrity tax saga centers on Stephen Baldwin, brother of well-known actor Alec Baldwin. Brother Stephen was arrested by New York State tax authorities in 2012 on charges of felony tax evasion. The State tax authorities alleged that Baldwin had willfully failed to file state income taxes during the years 2008 – 2010. Baldwin, who has not been without his share of financial difficulties during the course of his career, owed upwards of $350,000 to New York State at the time of his arrest. Baldwin made a good faith payment of $100,000 to the state immediately following his arrest in order to prove that he was serious about resolving the debt.
Ultimately, Baldwin avoided jail time by pleading guilty and working out a payment agreement with New York State. The judge presiding in Baldwin’s case allowed him to walk free provided that he settle his New York State tax debt within one year.
At one time, former New York Mets baseball player Darryl Strawberry was among the most talented and celebrated professional baseball players in Major League Baseball. An eight time Major League Baseball all-star selection, in 1988 Strawberry finished 2nd in voting for “most valuable player” when he led the National League in home runs with 39. Though he distinguished himself as a professional ballplayer, Strawberry has not been without his share of personal troubles, including tax and financial troubles. In 2014, an announcement was made that Mr. Strawberry’s deferred compensation from an earlier MLB contract was up for auction by the IRS to settle some of his back tax debt. Strawberry had decided to defer receiving a portion of his $7 million contract with the Mets until after retirement, at which point the money would be distributed regularly over the course of 30 years. But Strawberry’s tax troubles made this compensation fair game for the IRS.
Strawberry also got into trouble with the taxman when he failed to report income from autograph signings and other media appearances. Strawberry avoided jail time for those failures to report, but still received a sentence which involved probation, community service and home confinement, and was also ordered to pay back more than $350,000 in back taxes, penalties and interest.
As was stated at the outset, celebrities are not only subject to the same types of problems as everybody else, in many cases their troubles are much more serious. These three well-known public figures got themselves into a whole bunch of trouble with the taxman, and went through significant hardships to have their tax troubles taken care of. Even though you may not have tax issues on the magnitude of the celebrity tax problems discussed in this article, know that the firm of Mackay, Caswell & Callahan, P.C. is capable of resolving your tax issue, no matter how severe it may be. If you need assistance with a tax matter, don’t hesitate to contact one of our top New York City tax attorneys and we will get started helping you today!