Lionel Richie Sings a Different Tax Tune

By Ken Berry
 
Celebrity tax troubles aren't limited to the Lindsay Lohans of the world. Even those with untarnished reputations like Lionel Richie can go afoul of the IRS. The legendary singer, who rose to fame with the Commodores and then carved out a highly successful solo career, has been slapped with a tax lien of $1.1 million by the IRS for unpaid income taxes attributable to the 2010 tax year.
 
Richie is one of the top-selling recording artists of all time. He's garnered more than twenty-five gold and platinum records through the years and just released a new album, Tuskegee, which has rapidly climbed the charts. 
 
Talking Points
  • Taxpayer problems can occur in a business with income peaks and valleys.
  • The tax penalties can reach close to 50 percent of the initial tax burden.
  • The IRS will apply interest charges on the unpaid amount of tax and the penalties.
  • Frequently, a taxpayer will be socked with multiple liens for multiple years.
"I was recently made aware of the situation by my new team, and it is being handled immediately," Richie said in a prepared statement. He's had no history of financial problems in the past.
 
Entertainers and star athletes who suddenly earn large sums of money often neglect their tax liabilities. To be fair, they usually rely on professional advisors to handle these matters. In a business where peaks and valleys are common, they could be forced to hand over the keys to their mansions and stable of luxury cars if they can't come up with the cash. It doesn't appear that Richie has reached that point.
 
The IRS files tax liens in county courthouses when it believes taxpayers aren't cooperating. It doesn't publicize the liens, nor do the records show when taxpayers are working with the IRS to settle the shortfall. As a result, the tax debts of the "rich and famous" can go undetected for years, until one of the entertainment media outlets breaks the news.
 
The tax penalties can reach close to 50 percent of the initial tax burden. Then the IRS applies interest charges on the unpaid amount of tax and the penalties. Frequently, an entertainer will be socked with multiple liens for multiple years. 
 
Related articles:

Already a member? log in here.

Editor's Choice

Upcoming CPE Webinars

Dec 3The materials discuss the concepts and principles in the AICPA’s new special purpose framework.
Dec 8Kristen Rampe will cover how to diffuse the tension in challenging situations in this one-hour webinar.
Dec 9A key component to improving your firm’s workflow efficiency while enhancing your profitability at the same time is how you leverage emerging technologies.
Dec 16Kristen Rampe will give tips on how to bring confidence into the room and build a valuable network.