Famous names go round two with the Taxman

Rapper Lil Wayne (real name, Dwayne Carter) probably breathed a sigh of relief a few months ago when he settled his $1.13 million debt with the Internal Revenue Service. That debt related to income from 2004, 2005, and 2007. But compared to the new lien just filed for income earned in 2008 and 2009, that previous bill must seem small. The good news is, Lil Wayne's income must have grown substantially in the last few years. The bad news is, the new lien, filed in Miami, is for $5.6 million in back taxes.
Just months ago, in the fall of 2010, Carter was released from Rikers Island after serving nearly a year on gun possession charges. AllHipHop.com claimed last year that Carter's tax woes were a result of a special IRS unit focused on targeting rappers, athletes, and entertainers. They believe that in 2007, the tax agency formed an "issue management team" to collect from these highly paid individuals.
"A few years ago, they concluded that athlete and entertainer taxes might be escaping their radar. So they reinstated a division to only deal with this area," Bill Zysblat told reporters at AllHipHop.com. Zysblat is with the global touring and accounting company RZO Productions.
Boxer Floyd Mayweather is also going a second round with the taxman. The IRS filed a lien against him in Las Vega last January in the amount of $3,359,279. The tax bill was generated by income of $25 million, the purse he won when he came out of retirement in 2009 to fight Juan Manuel Marquez.
Mayweather, now 34, went the first round with the IRS two years ago. At that time the fed filed a lien against him for $6,165,735 for income earned in 2007. The 2009 fight against Marquez extinguished that debt before he even stepped into the ring. Prior to that match, Mayweather had retired from boxing. When the news of the upcoming fight was revealed, the IRS prepared to file a levy with the Nevada Athletic Commission to collect $5.6 million from the purse Mayweather would win for fighting Marquez ($4.7 million in back taxes, and $900,000 in penalties). The levy was never filed, and the tax bill was paid out of Mayweather's earnings from the match with Marquez. At the time, the boxer's tax attorney said he had settled all of his tax debt. However, although he may have paid all the back taxes due at that time, it appears Mayweather did not pay tax on the $25 million he earned that year (from the Marquez match and Pay-per-view income), hence the new lien.
Mayweather is also facing legal troubles for domestic violence and a defamation lawsuit filed by boxer Manny Pacquiao.
Related items:

You may like these other stories...

IRS audits less than 1 percent of big partnershipsAccording to an April 17 report from the Government Accountability Office (GAO), the IRS audits fewer than 1 percent of large business partnerships, Stephen Ohlemacher of the...
Legislation coming out of Washington just might reduce homeowners' burden for disaster insurance. It's a topic very much on everyone's minds since the mudslide in Oso, Washington. The loss of human life was...
Divorce is hard, and the IRS isn't going to make it any easier. The IRS generally says "no" to tax deductions that might ease the pain of divorce. In certain circumstances, however, you might be able to salvage...

Upcoming CPE Webinars

Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.