Lionel Richie Sings a Different Tax Tune
by AccountingWEB on
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.
- 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.
You may like these other stories...
Tesco accounting probe finds “inappropriate behavior” by staff – reportsClare Hutchison of Reuters wrote on Sunday that an investigation into a 250 million-pound ($402 million) profit overstatement at...
Did you ever feel as if you're preparing taxes in the Twilight Zone? You may be more right than you think. Each year, professional preparers all over the country have to work in a shadowy reflection of the normal tax...
The split over convergenceDavid M. Katz of CFO wrote an interesting article on Thursday about the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) backing away from their...