American Tax Relief Shut Down by Federal Trade Commision
Sharon & Ozzy Osbourne Owe Back Taxes
By Josh Board • Mon, Apr 11th, 2011
Sandiego.com
With tax day around the corner, no better time then now to have a story about the latest singer to run into tax problems. Ozzy and Sharon Osbourne could lose their US home if they don’t pay the $2 million tax debt on it. 
They’re one of the wealthiest couples in the UK, and aside from Ozzy’s music career, Sharon has had success with the Osbourne’s reality show, being a judge on the X Factor and America’s Got Talent, and now a panelist on The Talk. Sharon was also the first of the Osbourne clan to run into tax problems, when in 2009 she was slapped with a $23,000 tax bill to the State of California for payments going back to 2007.
TMZ has reported that daughter Kelly was hit with a tax lien of $34,000 last month.
Over the last few years, Ozzy and Sharon have accumulated a bit of debt. Documents filed by tax authorities state that “John” and Sharon Osbourne, ‘self-employed’, owe $718,948 in tax from 2008, and $1,024,175 from 2009.
Sharon did what most celebrities would do in this situation. She fired off a message on Twitter last Saturday. It said: You can’t rely on anyone but yourself. You have to be on top of your own business affairs. My fault. Lesson learned.
The most famous tax problem celebrity is Willie Nelson, who was hit with a $16.7 million tax bill in 1990. That stemmed from him not paying taxes between ’78 and ’82, and owing $6.5 mil. An additional $10.2 million was tacked on in penalties and interest. The IRS froze his accounts and auctioned off items in his personal position. Many of his fans bought those items, only to return them back to Nelson. Eventually, the IRS claimed Nelson owed $30 million, but that they’d settle for $17 million. This got Nelson poking fun of that in various commercials, and even releasing the album IRS Tapes: Who’ll Buy My Memories?
Releasing a record like that was nothing new. Marvin Gaye released an album called Here, My Dear, when he owed money on alimony payments.
When John Cleese played Spreckels Theatre here in 2009, he was calling it The Alimony Tour. His third wife got a $13 million divorce settlement, and he had to pay her a million a year in alimony. Perhaps he should’ve known better before marrying wife #3, but the comedic actor and Monty Python member does have a law degree – and is smart enough never to have run afoul of the IRS.
The Isley Brothers lead singer Ronald declared bankruptcy in 1997 after the IRS seized his property, including a yacht. He’s currently serving a 37-month sentence for tax evasion and failing to file a tax return.
Mr. Vegas, Wayne Newton, filed for bankruptcy in the early ‘90s with $20 million of debt. He got back into financial trouble in 2005, when the IRS claimed he owed them almost $2 million in back taxes.
Another singer that had a big Vegas show – Toni Braxton – filed for Chapter 7 a second time, late last year. She had well over $10 million in unpaid debts to numerous creditors, one of which was the IRS.
Wesley Snipes was recently given a sentence for years of failure to pay taxes. What a lot of people don’t realize is, the IRS is really good about working on payment plans with people, and the interest isn’t outrageous. Snipes was given jail time for continuing to run afoul of the tax laws. He made $40 million since 1999 (thanks mostly to the Blade films) and between 1999 and 2004, he never filed taxes. In 2006, he even tried to get a $7 million refund.
What a lot of people don’t realize is, if you don’t file, the IRS does a Substitute ForReturn for you. This doesn’t work so well for the rich and famous, as the IRS isn’t writing off all the things those folks probably would for deductions.
These days the IRS has more sophisticated resources and incentives (hundreds of billions owed to the federal government) for tracking down non-filers.
I’m guessing the Osbourne’s are in no real danger of losing anything they own. The IRS would have no problem believing they could pay back anything they owe from future earnings, and wouldn’t make them sell houses or personal items, the way David Crosby had to sell a yacht for a million bucks when he ran into financial problems.
Ozzy’s son Jack Osbourne has a production company (Jacko Productions) that has a documentary on Ozzy that is supposed to hit the theatres later this year. One of the things covered is all the craziness his dad was involved in over the years. We assume Jack has learned from the things that almost killed his father, and made him the punchline to many jokes.
Let’s hope Jack doesn’t also follow in the family footsteps and run into problems with the IRS in the future. Let’s also hope Ozzy doesn’t bite the head off an IRS agent.
Webster, Mass., man charged with killing wife shortly after IRS agents seized car for taxes
THE ASSOCIATED PRESS
March 23, 2011
DUDLEY, Mass. — A Webster man charged with killing his wife about an hour after two IRS agents seized their car for nonpayment of taxes has been ordered held without bail.
William Freudenthal (FROY’-den-thal) pleaded not guilty to second-degree murder Wednesday in Dudley District Court.
Worcester District Attorney Joseph Early Jr. says police responded to the 50-year-old Freudenthal’s home Tuesday when he became angry at the IRS agents.
Police returned less than an hour later after getting two 911 hang-up calls from the home. Officers found Jennifer Freudenthal on the bathroom floor with head and neck injuries. She was pronounced dead at a hospital.
William Freudenthal’s lawyer called the death an accident.
Police say they have gone to the home several times for alleged domestic violence incidents.
Lots of Big Stars Are in Big Trouble With the Tax Man
By Lindsay Carlton
Published March 21, 2011|FoxNews.com
March 26, 2010: 
Al Pacino poses for a portrait in Beverly Hills, Calif.
Despite their high-priced tax attorneys and mega-millions, big stars can find themselves in big trouble come tax time.
Take Hollywood director Martin Scorsese. He was recently nailed with a $2.85 million bill for unpaid taxes. Scorsese was charged for past-due tax and related interest penalties. Although Scorsese’s spokeswoman Leslee Dart says the entire amount is now paid in full and that he has no current IRS debts, sources say the Oscar-winning director’s tax woes are due to his dealings with celebrity accountant Kenneth Starr. Starr was jailed for seven and a half years for a $33 million ponzi scheme, and has duped other superstars in his corrupt plots. He scammed Hollywood heavyweights such as Uma Thurman, Lauren Bacall and Al Pacino, to name a few.
Pacino allegedly failed to pay taxes for two years, a bill for $169,143 in 2008 and $19,140 in 2009, totaling $188,283. Anyone who would stiff this “Godfather” star out of $200,000 might be sleeping with the fishes too, but luckily for Al Pacino, the IRS doesn’t handle their business the same way the mob does. Pacino poured the blame on Starr, his business manager and close friend for years. The money hungry financier apparently used a lot of his fraudulent earnings to play sugar-daddy to his younger wife, ex-pole dancer Diane Passage, who enjoyed a lavish lifestyle. “Managers can be very helpful, but many are not skilled in the area of tax planning and some are outright greedy when given control of celebrities finance,” said Ray Lucia, a certified financial planner.
A spokesperson for Pacino said the “Scarface” actor is working to resolve the situation as soon as possible with a new financial manager.
Another Hollywood cash cow who skipped his IRS bill is Jennifer Lopez’s husband, Marc Anthony. The Latin crooner owes $3.4 million for unpaid taxes on his Long Island mansion. Anthony has a history of running from the tax man. In 2007 he failed to pay taxes on his $15 million income over a five-year-period and ended up paying $2.5 million in back taxes. One might assume that such a power couple would have a better handle on their finances, but some tax attorneys aren’t surprised. “They live in a world where everyone gives them more and more leeway and slack — and they slowly develop an attitude of being above it all,” said Doug Burns, a federal prosecutor who has prosecuted dozens of tax fraud cases.
One pop star even sang a song about paying bills, the aptly titled “Bills Bills Bills,” but then forgot to fork up the cash herself. Former Destiny’s Child singer Kelly Rowland owes $98,634 in back taxes. The government filed a lien against her on Nov. 8, according to the Detroit News. The songstress hasn’t had much success since splitting from the Beyonce Knowles-led girl group. She also recently parted ways with her long-time manager and Beyonce’s father, Matthew Knowles. “Celebs who are attending to other details in their lives may brush taxes aside for later, but by then it’s too late,” said CelebTV.com host Kelli Zink.
“Survivor” winner Richard Hatch has had his fair share of tax trouble. The reality star spent three years in jail for failing to pay taxes on the $1 million prize money he won on the hit show. Hatch is heading back to the slammer for not settling a tax bill that is now reportedly up to $2 million. Hatch is currently starring in Donald Trump’s “Celebrity Apprentice” show. Although the episodes of the series have already been filmed, he will miss the live finale in May while he finishes his sentence behind bars. Along with his prison term, Hatch will remain under supervision for 26 months, and 25 percent of his wages will be garnished to pay back the IRS.
Joe Francis, founder of “Girls Gone Wild,” also spent some time behind bars for his tax tribulations and says the IRS targets celebrities every year around tax day. To avoid glitches in your taxes, Francis recommends Hollywood newcomers hire reputable business managers and get references from their other clients. “Good financial managers are helpful, ones like Bernie Madoff are awful. I was young, I was making a lot of money,” Francis said. “You trust people like lawyers and accountants. I didn’t even sign my own tax return. I didn’t even question it.”
What To Do When Someone Else Messes Up Your Taxes
“My dad has always done my taxes,” Elaine R., a Boston resident, said. “Ever since I was sixteen years old and had my first job. But last year, something happened. I don’t even know what. But the IRS is sending me all of these notices about an adjusted return and how I have to send them all of this money – plus interest!”
One of the most common reasons people get into trouble with the IRS is when they have an unqualified individual prepare their tax returns. Tax law is really complicated, and it changes every year. Even if the tax law changes don’t affect you, you could be in the same boat as Elaine – the returns that were perfectly adequate when she was a teenager with a single job just don’t cut the mustard now that she’s a homeowner who needs to itemize. It’s easy to make a mistake if you’re not a professional tax preparer.
When Your Income Tax Expert Lets You Down
It can come as a shock when you discover that the person you trusted to do your income taxes didn’t do a great job. You may feel anger, resentment, stress, and fear. After all, the IRS has a great deal of power: they can audit you, levy your bank accounts, and impose significant penalties – and you might not even know what was wrong in the first place.
If you’ve gotten notices from the IRS about errors in your tax return – or if you trusted someone to file tax returns or pay payroll taxes on your behalf and they failed to do so – you need the best tax help available right away. The IRS isn’t going to go after the person who prepared your return: they’re going to go after you. Prepare yourself and protect your interest by working with a team of tax professionals who can solve your problems fast!
IRS Has Problems Identifying Prisoner Tax Fraud
Washington, D.C. (January 3, 2011)
By Michael Cohn from accountingtoday.com
“More than two years ago, Congress gave the IRS the authority to share tax information with the Federal Bureau of Prisons,” said Senate Finance Committee ranking member Chuck Grassley, R-Iowa, in a statement. “The IRS and the Federal Bureau of Prisons still don’t have an agreement in place to share information. Meanwhile, the number of inmates’ false returns and refunds continues to rise. This signals that prisoner tax fraud is a low priority for the federal government. The agencies need to take action and correct that impression. While they wait, taxpayers are picking up a growing tab for prisoner tax fraud.”
TIGTA found that, as of October 2010, the IRS had not completed the required agreements to allow the IRS to disclose prisoner tax return information to prison officials. As a result, no information has been disclosed to either the Federal Bureau of Prisons or State Departments of Corrections.
In addition, the Calendar Year 2009 Report to Congress on prisoner fraud is incomplete. The report stated the IRS identified 44,944 false or fraudulent prisoner tax returns during calendar year 2009. However, the processes the IRS uses to identify prisoner tax returns may result in the IRS understating the amount of prisoner fraud. Finally, TIGTA’s review of the process used by the IRS’s Criminal Investigation Division to compile the 2009 prisoner data file identified a lack of managerial oversight to ensure the accuracy and reliability of this file.
TIGTA recommended that the IRS work with the Treasury Department to seek legislation to extend the period of time the IRS has to disclose prisoner tax return data to the Federal Bureau of Prisons and state prison officials. TIGTA also recommended that the commissioner of the IRS’s Wage and Investment Division revise the annual report to provide Congress with a complete assessment of potential prisoner fraud. TIGTA said the IRS should ensure that all tax returns filed by prisoners are processed through the Electronic Fraud Detection System and receive a prisoner indicator. The report also recommended that the IRS revise prisoner filters to validate the wages and withholding associated with prisoners incarcerated for a year who filed tax returns claiming a refund. The IRS should also develop a process to assess the reliability (accuracy and completeness) of data received from federal and state prisons, TIGTA suggested.
The IRS agreed with two of TIGTA’s five recommendations and partially agreed with two recommendations. The IRS did not indicate its agreement or disagreement with one of the recommendations, on providing Congress with a complete assessment of potential prisoner fraud by revising the annual report to include the total number of tax returns filed by prisoners, number selected for fraud screening, and the number verified as false or fraudulent.
However, the IRS noted hat it would continue to report to Congress all of the prisoner information that is required to be reported by the Inmate Tax Fraud Prevention Act of 2008, such as the number of false and fraudulent returns associated with prisoner filings. In addition, the IRS said it would respond to future Congressional requests pertaining to prisoner- related fraud.
The new report is available here.
TIGTA issued a report last September saying the IRS needs to subject tax returns filed by prisoners to greater scrutiny for fraud. The report was largely about how expanded access to wage and withholding information could improve the identification of fraudulent tax returns, but it noted that the majority of tax returns the IRS identifies as being filed by prisoners are not being sent to screening to assess fraud potential.
TIGTA’s review identified 253,929 (88 percent) of the 287,918 tax returns filed by a prisoner as of March 24, 2010, were not selected for screening. Of those tax returns not screened, 48,887 individuals had no wage information reported to the IRS by employers.
These 48,887 prisoners claimed refunds totaling more than $130 million including Earned Income
Tax Credit claims of $78.5 million. Some of these refunds may have been stopped by other compliance activities. For example, TIGTA determined that the IRS prevented the issuance of nearly $18.1 million in EITC claims for 4,532 of the 48,887 prisoner tax returns.
Actor Wesley Snipes reports to prison to begin sentence
(CNN) — Actor Wesley Snipes reported to a medium-security Pennsylvania prison Thursday to begin a three-year sentence for failing to file tax returns.The 48-year-old actor is now incarcerated in McKean Federal Correctional Institution in Lewis Run, officials said.
Snipes’ attorney said he is appealing his client’s misdemeanor convictions for not filing tax returns in 1999, 2000 and 2001.
Snipes was acquitted of felony charges.
Snipes is nervous, he said, but hopeful that his prayers will be answered.
The actor conceded he was uneasy about losing his freedom if his appeal to the U.S. Supreme Court fails.
“I think any man would be nervous if his liberty is at stake,” Snipes said. “I’m disappointed that the system seems not to be working for me in this situation.”
Prosecutors said Snipes earned $40 million since 1999 but had filed no returns and had been involved in a tax resisters group.
Snipes disputed such involvement and said that the failure to file was his advisers’ fault.
“This is another thing that has been misreported: It has been framed that I was a conspirator and that I was an architect in a scheme by an organization that has been characterized as tax protesters,” Snipes said. “The press hasn’t reported that I was a client of people who I trusted (who) had knowledge and expertise in the areas of tax law that would protect my interests.”
Snipes is best known for his roles in the “Blade” action films, the comedy film “White Men Can’t Jump” and the drama “Jungle Fever.”
In February, a jury convicted Snipes on the misdemeanor charges, but he was acquitted of more serious felony charges of tax fraud and conspiracy. Jurors accepted his argument that he was innocently duped by errant tax advisers.
Defense attorneys in court documents suggested that to sentence Snipes harshly would be to disregard the jury’s verdict.
But prosecutors, in their sentencing recommendation, said the jurors’ decision “has been portrayed in the mainstream media as a ‘victory’ for Snipes. The troubling implication of such coverage for the millions of average citizens who are aware of this case is that the rich and famous Wesley Snipes has ‘gotten away with it.’ In the end the criminal conduct of Snipes must not be seen in such a light.”
Snipes suggested he was unfairly singled out by prosecutors.
“It does seem to be rather unusual and rather bizarre when you had a prosecutor come into the sentencing and say that this is the biggest tax trial in the history of the IRS,” Snipes said. “I think there is a certain amount of selectivity going on here.”
Snipes indicated he was disturbed by some public comments that he was receiving “just punishment.”
“It’s been presented as though I’m worthy of this punishment,” Snipes said. “I’ve been a law-abiding citizen ever since I grew up in the Bronx, New York.”
One juror, Frank Tuttle, gave Larry King Live a written statement that three other jurors had made up their mind that Snipes was guilty before the trial began.
The jury’s verdict was a compromise between those jurors who thought Snipes was guilty and those who didn’t, Tuttle said in the statement.
“That’s when a deal was made to find him guilty on the failure to file taxes and not guilty on the federal tax evasion charges,” Tuttle said in the statement. “We did not think he would go to jail.”
Snipes’ attorney, Daniel R. Meachum, said neither he nor Snipes had any involvement in preparing that juror’s statement to Larry King Live, saying the show’s producers obtained it on their own.
“We on the defense team never suggested that the media reach out to any of the jurors,” Meachum said.
Snipes contended that some media accounts of his trial have distorted public perceptions.
“There have been some egregious and very malicious efforts to report the facts of this case,” Snipes said. “I was never charged with tax evasion. I’ve never been a tax protester.”
Snipes said he has paid his taxes.
“They claimed that there was a certain number that was owed and that number has been all over that place. The press has escalated it and changed it a number of times. But we think we are fully compliant with what was owed,” Snipes said.
CNN’s Jessica Thill contributed to this story.
Why Wesley Snipes got caught. Celebrity or not, non-filers can run but they cannot hide from the IRS.
The simple answer as to why Wesley Snipes will soon begin serving a three-year sentence for tax evasion is that he didn’t file his tax returns for 1999 through 2004 and also tried to get a $7 million refund in 2006 on returns filed before he stopped filing in 1999. The broader answer is that in 2010, the IRS has more sophisticated resources, more personnel, and more incentive (nearly $345 billion owed to the federal government, which has a budget deficit in the trillions) than ever before to track down non-filers. In 2010 and beyond, if you fail to file your tax returns, chances are exceptional that you will get caught.
“What non-filers do not realize is the IRS will prepare a Substitute For Return (SFR) for you if you don’t file a tax return yourself. Only that SFR will not have the vast majority of the deductions you might be entitled to had you filed on your own,” said Matthew J. Previte, CPA, a local taxpayer advocate expert and owner of TaxProblemsRUs.com. “So, if you don’t file a tax return for several years like Mr. Snipes, the IRS has the technology to prepare an SFR for you and then will start burying you with severe penalties and interest based on that grossly inflated SFR assessment.”
Fortunately for non-filers, the IRS generally only looks back six years for unfiled tax returns. Yet without including all the deductions one might be entitled to, those SFR assessments can be grossly inflated due to that lack of deductions. The IRS can also utilize any number of resources to calculate income. For example:
- Bank accounts – IRS can track non-filer accounts and review your deposit and spending histories.
- Credit card spending – IRS can track overseas and domestic spending to prove income.
- Audits of payees – Often times the people non-filers pay for goods and services are audited and that can alert the IRS to the payer’s non-filing.
- IRS whistleblower programs – Does anybody else know you haven’t filed? An ex-wife or significant other? Perhaps a vindictive business associate? IRS whistle-blower programs raise the red flag and agents are more than happy to follow those leads.
So, with all the mechanisms available to the IRS to catch non-filers, why do people still not file?
“The reasons vary. Everything from bad advice from tax protestors and unscrupulous tax advisors to financial or health problems to even just plain old general neglect. Once one year is unfiled, fear and embarrassment most often perpetuate the problem, causing additional years to go unfiled. Some might even think if they don’t file, they won’t ever have to pay taxes. I’ve represented quite a few people who haven’t filed for 25 years or more,” said Previte. “The reality is, with the resources the IRS now has, non-filers will get caught and the punishment, if prosecuted and proven guilty like Mr. Snipes, is one year in prison per year you don’t file up to six years. If you’re lucky enough to avoid prosecution and jail time, the IRS will still bury you in taxes, penalties, and interest.”
Continues Previte, “The real irony about non-filers is that by filing their tax returns—even if they don’t have the money to pay the IRS—they have more options to resolve their tax debts than by not filing their tax returns.”
Some of those options include:
- Offer in Compromise program
- Payment plan
- Bankruptcy
- Uncollectible status
- Penalty Abatement
- Lien Subordination
- Innocent Spouse Relief
“These are just a few of the scenarios where having a qualified licensed tax professional represent you—instead of pulling your bed covers over your head and praying you don’t get caught–can literally save you thousands of dollars and dramatically reduce the likelihood of prison time,” said Previte. “At the very least, it can lessen the stress and anguish that come with having tax debt hanging over your head and your family’s.”
To schedule a free confidential consultation, call 877-259-8200 or, for more information, visit www.TaxProblemsRUs.com.
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