Celebrity Tax Scams: The American Way

There seems to be no shortage of news stories coming out lately linking celebrities to tax scheming.From the not-so-surprising Immortal Hulk Hogan whose shocking breakup with long-time wife Linda is rumored to be a mere rouse, only attempting to shield the Hogan’s assets after the Hulk’s son was involved in a serious auto accident; all the way down to claims by the State of New York Department of Taxation that Derek Jeter has robbed them of millions in state income taxes by claiming to be a resident of the State of Florida.

Ex-rapper mogul Damon Dash has been accused of owing $2 million to the IRS. In turn, Dash has sued his accountant for allegedly embezzling the payments that were to be made to the IRS.

Perhaps the mother of all tax-fraud celebrity cases in the news this year has been the Blade star himself–Wesley Snipes. IRS authorities allege Snipes claimed refunds of almost $12 million in 1996 and 1997 for income taxes already paid. The fraudulent refunds came as a result of Wesley’s alleged conspiracy with American Rights Litigators, a group famous for making bizarre claims (see here, here and here) asserting that only income derived from foreign sources is taxable. As a result of the tax-evasion case filed by the IRS, Snipes has made several procedural claims–including the latest claim shot down by U.S. District Judge William T. Hodges, that Snipes could not receive a fair trial because of the KKK presence in Ocala, Florida (approximately 80 miles north of Orlando).

The question is why are celebrities so often caught in major tax scams. I believe the answer lies at the core of many of our nation’s founding principles, including a basic resistance to taxation, and downright defiance of over-taxation (see, American Revolution). We live in a society driven by individuals, and it must be hard for Wesley Snipes to part ways with all the loot he brought home by starring in Murder at 1600.

Indeed some of the squabbles, including Derek Jeter’s claiming he has residence in Florida, makes slightly more sense than Snipes’ claims, despite the fact that Jeter plays baseball in the Bronx at least 81 times each year.

Although I wouldn’t agree with the Hogan’s maneuvering, it could be smart planning if they’re using a divorce to shield assets that might be reached in a lawsuit resulting from their bonehead son’s auto accident.

These scams seem to be the rule not the exception, and the irony of it all is that Americans don’t really fault these celebrities for their misgivings. The truth is that the average American who has to deal with the AMT and not receiving their $2,000 refund for three months must take great pride in seeing these highly visible celebrities do to the IRS what they themselves would love to do.