Recently in the news, there have been several stories about celebrities in trouble with the IRS. There were numerous stories last week about rocker Ozzy Osbourne owing over a million dollars in back taxes. And you may recall the stories about baseball legend Pete Rose who owed back taxes and was forced to pay the IRS $973,693.12 for tax liabilities he owed between 1997 and 2002. And then, of course we recently heard about actress Darly Hannah who reportedly owed back taxes to the federal government to the tune of $62,622.
But the list of celebrities in trouble with the IRS is much longer than these few names. For example, take baseball great Darryl Strawberry who reportedly owed $430,000 in back taxes from the 1990’s. And who can forget Willy Nelson who ended up throwing a concert to generate income to pay the back taxes he owed to the federal government. Others like Mike Tyson, Michael Phelps, Andre Agassi, and Derek Jeter have all had their own tax troubles over the past few years.
So if these folks, with their expensive tax lawyers, accountants, and business managers can’t stay on top of their tax liabilities, then what should you do if you get behind and end-up owing back taxes and/or have unfiled returns? Well the first thing is don’t panic. The IRS will work with you to try to resolve your back taxes. Get your unfiled returns completed and filed as quickly as possible, as this will help you negotiate a settlement of your entire tax liability once all the missing returns have been filed.
Second, be proactive in managing your tax liabilities. If you wait and avoid dealing with your back taxes, you could be subject to IRS wage garnishments, IRS levies and/or IRS liens. Not to mention you could be racking-up more interest and penalties during the time you are sticking your head in the sand and wishing that the “bad people” would go away.
Third, don’t be afraid to ask for help. There are a lot of options for people who fall behind with the IRS and end-up owing back taxes. You may contact the IRS directly and to try to work out a settlement or you may consult a tax attorney or other tax professional to get answers and find out what which options may be available to you.
Finally, don’t get depressed. As you can see even some of America’s wealthiest and better known citizens get into tax trouble from time to time. So don’t panic, be proactive, get help and get those unfiled tax returns completed and filed, and pay the back taxes you owe, or work out a settlement, before the IRS catches-up with you and gets its money from you through other means like IRS wage garnishments, IRS levies, and/or IRS liens.
Segal, Cohen & Landis 9100 Wilshire Blvd. Ste. 601E Beverly Hills, CA 90212 (310) 285-3999