Outvibed: Celebrity Tax Scandals

We hope you've already done your taxes because the filing deadline is coming in hot. (If you haven't you can e-file using online software like the TurboTax Deluxe 2016 Tax Software Federal & State + Fed Efile PC download [Amazon Exclusive], $35.79.)

Oh, and if you thought ducking out on the IRS was an option, think again. These celebs prove that not even the rich and famous can get special treatment from Uncle Sam — and if you hide, he will find you. Here are ten celebrity tax scandals to either motivate you to file yours or provide you with a little entertainment as you await your return.

 

1) Derek Jeter

celebrity tax scandals

He may be known as a biracial angel, but we bet tax officials don't see a halo when they look at the five-time World Series champion. The first on our list of celebrity tax scandals is Derek Jeter. In 2011, Jeter bought an apartment at Trump World Tower in NYC. The problem? He didn't pay any New York state income tax on the $38 million he made from his contract with the Yankees between 2001 and 2003. Jeter's argument? He was a Florida resident at the time (Florida doesn't have a state income tax), so he didn't owe New York any taxes. The case was settled in 2008 and the terms were not disclosed.

 

2) Martha Stewart

celebrity tax scandals

Before she did jail time for insider trading in 2004 (her nickname in prison was M. Diddy just for the record), Stewart was a convicted tax evader. Back in 2000, she was living the dream in her East Hampton mansion, but told the tax man that she was living in Connecticut. In 2002, her lie caught up to her and she was forced to pay the state of New York $220,000 in back taxes and penalties for her Hamptons home. Stewart claimed that she didn't owe taxes on the property because she didn't spend much time there, but the judge didn't buy her excuse.

 

3) Flo-Rida

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The club may not be able to handle him, but the IRS sure can. In January 2014, a federal tax lien was filed against the rapper because he owed a whopping $1.2 million to Uncle Sam for income he made between 2009 and 2011. You'd think a bill like that would have Flo-Rida feeling “Low,” but this wasn't his first run-in with the tax man. Back in 2012, the IRS put a lien on his $1.6 million South Florida Estate because he owed upwards of a million in unpaid taxes. Perhaps getting through this ordeal was the inspiration for the rapper's 2015 album entitled ‘My House'…

 

4) Khloé Kardashian

khloe kardashian taxes

The Kardashian family are certainly rolling in Kash (the Kardashian-Jenner clan has a net worth of over $300 million), and Khloé is no exception with a net worth of $25 million. But that doesn't mean she hasn't had her share of tax problems. In 2010, a tax lien was filed and the reality star owed $18,490.74 to the State of California from earnings she made in 2007–the same year she launched her reality career on “Keeping Up With The Kardashians.” Reportedly, Khloé did pay what she owed to her old accountant, but he dropped the ball and forgot to send it over to the tax collectors. Hopefully she's found a new accountant who's just as talented as her makeup artist…

 

5) Lindsay Lohan

lindsay lohan

The former Mean Girl didn't pay taxes on her earnings from 2009 and 2010, so she owed Uncle Sam $233,904. Lohan became close with actor Charlie Sheen in 2012 on the set of Scary Movie 5 and they apparently discussed everything–including her tax woes. To help her out and “pay it forward,” Charlie Sheen sent her a check for $100,000 which Lohan immediately used to pay off nearly half of her tax bill. But her troubles continued. In 2013, the state of California said she owed another $56,717 for taxes that she failed to pay in 2011. Now that's one serious hat trick, LiLo.

 

6) Nicolas Cage

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Nicolas Cage is one of the highest paid actors in Hollywood. He made $150 million between 1996 and 2011, earning $40 million in 2009 alone. But he blew through his fortune like a teenage girl at the mall with daddy's credit card. The purchases? 15 estates around the world including two castles, four luxury yachts, a private island, jewelry, a fleet of exotic cars, a $30 million private jet, exotic pets, art and collectibles (like a $276,000 dinosaur skull).  The one thing he didn't pay for during this time? His taxes. By 2009, he owed the IRS over $13 million. So he sold off tons of his assets (including the dinosaur skull!) to pay the bill.

 

7) Method Man

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The Grammy award-winning rapper and member of Wu-Tang clan was going to pay his taxes…but then he got high. “Because I got high, I forgot to pay. It was stupid,” he told reporters at the New York Post. In 2010, Method Man plead guilty to attempted tax evasion because he failed to file New York State tax returns from 2004 to 2007. He paid $106,000 in restitution.

 

8) Ozzy, Sharon and Kelly Osbourne

osbourne celebrity tax scandal

They say the apple doesn't fall far from the tree, which brings us to not one but three more celebrity tax scandals. In 2011, Ozzy and Sharon Osbourne found out that they owed $1.7 million in back taxes to the IRS from their publicist–after a reporter called to get the Osbourne side of the story. But being rock royalty, the couple happened to have $1.7 million lying around and quickly paid what they owed. Their daughter Kelly had a rough time with the IRS in 2011 as well. In 2011, the state of California claimed that Kelly owed $34,763 in unpaid taxes from 2009–the same year she competed on Dancing with the Stars.

 

9) Manny Pacquiao

celebrity tax scandal

Some celebrity tax scandals are so scandalous, they cross country borders. As a Filipino world champion boxer with career earnings of over $300 million, you wouldn't think Pacquiao had tax problems. But he was up against the ropes when not one, but TWO governments wanted to collect taxes from him. In 2013, The Philippine Bureau of Internal Revenue froze his bank accounts and properties because they said he owed $75 million for earnings from fights in the United States in 2008 and 2009. If that wasn't enough of a financial haymaker, the IRS in the United States then said he owed $18.3 million in unpaid taxes for 2006-2010. How's that for a one-two punch?

 

10) Ty Warner 

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Ty Warner is the billionaire creator of Beanie Babies, and we know your childhood collection is probably still sitting in the attic at your parents' house. Anyway, he hid over $100 million in a secret Swiss bank account to evade taxes. In 2013, he pleaded guilty to one felony count of tax evasion and was sentenced to two years' probation and 500 hours of community service. On top of that, he was forced to pay a $100,000 fine, a $53 million civil penalty, and $27 million in back taxes.

 

Want more celebrity tax scandals? These public figures also had their fair share of problems with the IRS:

  • Willie Nelson
  • Mike “The Situation” Sorrentino
  • Marc Anthony
  • Heidi Fleiss
  • Lindsey Vonn
  • Al Capone
  • Fat Joe
  • Lauryn Hill
  • Lil' Kim
  • Christie Brinkley
  • Lil' Wayne
  • Pamela Anderson
  • Chris Tucker
  • Aaron Carter
  • Martin Scorsese
  • Joe Francis
  • Al Sharpton
  • Mary J. Blige
  • Ja Rule
  • Teresa and Joe Giudice
  • Sean Kingston
  • Bow Wow
  • JC Chasez
  • Toni Braxton
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Author Headshot

Dani is the Founder & CEO of Invibed.  Prior to founding Invibed, Dani was an Investment Specialist at J.P.Morgan, where she managed assets for ultra high net worth individuals ($25MM+).  She holds a M.S. in Journalism from Columbia University and both an M.A. and B.A. in International Business from the University of Florida. Dani became a licensed financial advisor at age 20 and previously worked at CNBC on the show Mad Money with Jim Cramer. She’s fluent in sarcasm and has a deep appreciation for dance parties and all things neon.

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