Nicolas Cage: Poster boy for delinquent taxes

Just when you thought he’d learned his lesson, Nicolas Cage is wrestling with more tax issues. Since late last year he had become the poster boy for celebrities who don’t pay their fair share, making headlines time after time.

He complained of being perceived as a deadbeat, telling People magazine, "Over the course of my career I have paid at least $70 million in taxes. Unfortunately, due to a recent legal situation, another approximate $14 million is owed to the [Internal Revenue Service]. However, I am under new business management and am happy to say that I am current for 2009. All taxes will be paid, including any to-be-determined state taxes."
 
That may have been true then. Now, he has a new tax nemesis…California Governor Arnold Schwarzenegger. In April, the state of California filed a lien against Cage and his wife, Alice, for more $3.8 million in unpaid taxes. Here’s a recap of the tax melodrama that has become Cage’s life:
 
Round One
 
In early 2008, the actor was accused by the IRS of inappropriately writing off $3.3 million in personal expenses for income relating to 2002 through 2004. Forbes magazine said the expenses included such luxuries as limos, travel, a Gulfstream turbojet, lavish meals, and gifts.
 
After disallowing those expenses, the IRS sent Cage a personal tax bill for $814,000 and another one to his company, Saturn Productions, for $988,000. At that time, Cage’s business manager, Samuel J. Levin, told Forbes that the disputed amounts were “customary in the entertainment industry,” and that some related to the actor’s security and appearance (hairstylists, manicurists, personal trainers).
 
Cage proclaimed a great victory later in 2008 when the tax bill, which had totaled more than $1.8 million, was reduced by approximately one-third, or $666,000. Part of the reduction was because Cage’s representatives correctly pointed out that some of the disallowed expenses were counted twice by IRS authorities.  
 
Round Two
 
Less than a year later in mid 2009, Cage and Levin might’ve realized that they celebrated too soon. Once the IRS got the actor in its crosshairs, the IRS evidently decided to take a closer look at his other tax returns.
 
On July 14, 2009, they filed a lien in the Orleans District Court of Louisiana for a whopping $6,257,005. This time, he wasn’t able to get the taxman off his back so easily, and scrambled to sell his home in California for a reduced asking price of $17.5 million. It originally had been on the market for $35 million.
 
In case you worry that Mr. and Mrs. Cage will be living on the streets, don’t fret. They also own homes in New York, the United Kingdom, and the Bahamas.
 
Round Three
 
Next came tax year 2008, and an even bigger tax lien – this time for $6.7 million. Remember business manager Samuel J. Levin, who helped Cage beat down the IRS in the first tax lien? By the third round, Cage was blaming Levin for bad investment advice that, he said, put him and his family in financial jeopardy. Cage and Levin currently are embroiled in a $20 million lawsuit filed by the actor.
 
Round Four
 
Jump ahead to April 14, 2010. That’s when the state of California filed a tax lien against the Cages in the Los Angeles County Recorder of Deeds for $3,811,952.
 
Cage’s publicist told the Detroit News, "All entities are aware that this is in process and, from my understanding, all the parties are satisfied that everything will be paid back. Nicolas is doing everything that he needs to do to get these monies owed paid back."
 
Will there be a Round Five to report? Let’s hope not. .
 
Related articles:

You may like these other stories...

The IRS has announced the special per diem rates for 2014-15 that taxpayers can use for substantiating the amount of ordinary and necessary business expenses incurred while traveling away from home. The new per diem rates...
The issue of international assignees was, for a long time, limited to a small number of companies – meaning only those that operated on an international scale. But in recent years, global expansion has shifted into...
Exclusive: Lois Lerner breaks silenceIn her first press interview since the IRS Tea Party targeting scandal broke 16 months ago, ex-agency official Lois Lerner told Politico that employers won’t hire her, she’s...

Already a member? log in here.

Upcoming CPE Webinars

Sep 24
In this jam-packed presentation Excel expert David Ringstrom, CPA will give you a crash-course in creating spreadsheet-based dashboards. A dashboard condenses large amounts of data into a compact space, yet enables the end user to easily drill down into details when warranted.
Sep 30
This webcast will include discussions of important issues in SSARS No. 19 and the current status of proposed changes by the Accounting and Review Services Committee in these statements.
Oct 21
Kristen Rampe will share how to speak and write more effectively by understanding your own and your audience's communication style.
Oct 23
Amber Setter will show the value of leadership assessments as tools for individual and organizational leadership development initiatives.