Unfortunately, for both ex-NFL star Jamal Anderson and Grammy winner Lauryn Hill, the Tax Man cometh this year with a vengeance. According to published reports, both of these public figures are going through some very public tax problems. Earlier in the month of May, former Atlanta Falcons running back Jamal Anderson found himself in trouble with the IRS, with the government agency placing a tax lien of more than $1 million dollars on his property. According to documents uncovered by TMZ, the ex-NFL star failed to pay income taxes in 2007 and 2008. The failure to pay these back taxes left Mr. Anderson with a large tax liability for his delinquency.
In the case of Lauryn Hill, the singer reportedly did not pay income taxes for 2005-2007 on estimated earnings of $1.8 million dollars. If “[she] did this in order to build a community of people, like-minded in their desire for freedom and the right to pursue their goals and lives without being manipulated and controlled by a media protected military industrial complex with a completely different agenda,” or if she merely neglected to pay her taxes, the IRS is demanding that the award-winning artist answer for her tax evasion.
A pragmatic lesson to learn from the very public tax situations of Mr. Anderson and Ms. Hill is that whether you are a public figure or an ordinary citizen, the tax man eventually cometh. If you are having IRS troubles, there are a few reasons behind the demanding of the Tax Man for back taxes. First of all, it could be the result of a failure to file returns for a number of years, which was apparently the case with Ms. Hill. If you fail to file your returns during a period of time, the IRS will file them for you and assess a tax. An assessment of back taxes can also occur if the IRS, during the course of an audit, determines that the taxpayer owes more than was previously assessed. Finally, an inability to pay the taxes tied to a filed return could prompt the IRS to assess back taxes.
If you find yourself in any of these situations regarding back taxes, there are a few things you can do to ameliorate the problems, as back taxes can be reduced by a variety of actions. An offer in compromise with the IRS could reduce the back taxes, as the settlement could be more beneficial to the IRS than an attempt to collect years of unpaid taxes. Back taxes can also be reduced or eliminated by filing for Chapter 7 bankruptcy. These are more complex matters though, as special rules apply. Also, back taxes expire under operation of law after 10 years from the date they became due. In rare cases, back taxes can be assessed further than 10 years in the past.
The truth of the matter is, whether the back taxes assessed are for $1 million dollars or $1,000, it is always best to resolve the issue with a tax attorney as your advocate with the Tax Man.
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