As featured in The Wall Street Journal, Money Magazine, and more!

The Worst Celebrity Tax Problems

This article was written by in Taxes. 10 comments.

It’s with a tinge of schadenfreude that people are fascinated with the failures and foibles of famous celebrities. Every year, the IRS chases people who evade or underpay federal income tax, and actors and popular figures in the media, who often don’t manage their own finances, make the news.

The latest is Lindsay Lohan. You may remember her from such films as Mean Girls, Freaky Friday, and Herbie Fully Loaded. TMZ has discovered that the IRS has obtained against Lindsay for almost $100,000, representing tax she didn’t pay for her income in 2009. Like many busy people, Lindsay employs an accountant to handle her finances, and she says the oversight will be handled immediately.

Lindsay LohanThe sum Lindsay owes is small compared to the problems other celebrities have had with the IRS.

Wesley Snipes failed to pay up to $17 million to the IRS for his income taxes, not including penalties and interest. After his trial and a failed appeal, he was sentenced to prison for three years.

Nicolas Cage also blamed his accountant for his failure to pay a $14 million tax bill in 2010; even more recently, Nic failed to pay over $600,000 for a gift tax.

Pamela Anderson owed $2 million to the IRS and to the state of California.

Annie Leibovitz isn’t a movie star, but she is at the top of the list of famous modern photographers. She owed $2.1 million in back taxes, and pledged to sell her ownership of her photography to pay the bills.

Martha Stewart owed $220,000 to New York for taxes, but she believed she didn’t need to pay this tax because she didn’t spend time in that state.

Celebrities often have tax situations that differ from people who aren’t performers or professional athletes. They need to handle state tax returns for every state in which they’ve earned income each year, just like all taxpayers, but in any given year, performers may have earned income in a large number of states. Celebrities will almost always be too busy to handle their own tax returns, so they trust accountants to handle the paperwork and the payments.

On the other hand, it’s safe to say that some famous individual who owe the government money for failure to pay their tax bills are aware of the situation and are trying to skirt the law as much as possible, until they are forced to pay.

Photo: Rafael Amado Deras
TMZ via Don’t Mess With Taxes, New York Times, UPI, Back Taxes Help

Published or updated January 12, 2012.

Email Email Print Print
About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .

{ 10 comments… read them below or add one }

avatar 1 Anonymous

Finding competent accountants apparently is difficult! As most people who earn money in different states, they receive a W-2 or 1099. Any competent accountant can match a tax return with these various state or Federal documents. If I tie it to the celebrity, it is usually the ones I see in the news.

Reply to this comment

avatar 2 Luke Landes

Well, when it comes to tax, I wonder if people just try to see what they can get away with, and deal with the IRS looking for more. You would think it would be straightforward.

Reply to this comment

avatar 3 Anonymous

$2.1 million! Just think about all the social programs that could be funded with that type of money!

Reply to this comment

avatar 4 wylerassociate

I’m never surprised when idiot ignorant celebrities have problems with the IRS. I think more celebs that try to avoid paying taxes to the IRS should get the wesley snipes treatment.

Reply to this comment

avatar 5 Ceecee

I imagine that taxes are the last thing on their minds. The have people that do everything for them. But it still give us that “schadenfreude” moment. Dontcha love that word?!

Reply to this comment

avatar 6 Anonymous

I love the word schadenfreude as well – though it makes me start humming songs from Avenue Q (not that that’s a bad thing). I’m still looking forward to the day when I owe taxes on $2 million dollars worth of earnings – I can guarantee you that I’ll have an accountant that can handle it. :)

Reply to this comment

avatar 7 Anonymous

This is why quite a lot of famous people move to Switzerland – namely Formula One drivers. The sport was banned there for a long time following the 1955 Le Mans tragedy and this meant people like Michael Schumacher could live there and technically be classed as unemployed. The principality of Monaco is another favourite. If you’re Nic Cage, though, I don’t think the Swiss Alps are an option!

Reply to this comment

avatar 8 Anonymous

Wow Snipes actually got jailed for tax evasion.

Reply to this comment

avatar 9 shellye

All that money and they can’t afford a competent accountant…

Reply to this comment

avatar 10 lynn

Those are some mighty hefty tax bills.

Reply to this comment

Leave a Comment

Note: Use your name or a unique handle, not the name of a website or business. No deep links or business URLs are allowed. Spam, including promotional linking to a company website, will be deleted. By submitting your comment you are agreeing to these terms and conditions.