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...

By Cathy Stopyra and Todd SimmensUnderpayment interest, refund interest, and penalties charged to businesses are just a few of the considerations the IRS calculates when determining taxation for a given company. Though...
FASB mulling a revamped income statementDavid M. Katz of CFO wrote on Tuesday that the Financial Accounting Standards Board (FASB) is in the early stages of researching whether to launch a project aimed at improving and...
Renaissance avoided more than $6 billion tax, report saysThe Senate Permanent Subcommittee on Investigations said on Monday that a Renaissance Technologies LLC hedge fund’s investors probably avoided more than $6...

Upcoming CPE Webinars

Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.
Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.