Tax Blog

Famously Unsuccessful Tax Evaders

“Only the little people pay taxes.” – Leona Helmsley

Regardless of your wealth or influence, you are required to pay taxes to good ol’ Uncle Sam, and the penalty for trying to get out of it can be pretty severe. Many have tried to evade taxes—including some very notorious Americans. Here’s a closer look at some of their exploits.

Al Capone

Al Capone is one of the most infamous mob bosses in U.S. history, but he’s also well known for finally being brought in for tax evasion. This fedora-donning, cigar-smoking, zoot suit-wearing OG led the underground gambling, prostitution, and bootleg liquor industry of Chicago throughout the Prohibition Era.

When gang-related violence reached its peak, the people and police of Chicago started demanding a stop to the violence, but Capone was too good at covering his tracks to be brought down for murder. Instead, investigators brought him to justice (or at least a measure of justice) for tax evasion. You see, some people claim that he was worth over $100 million during his heyday, but he could only provide evidence of a small, legitimate income. When he couldn’t account for where he was getting the money for all of his extravagant living, he was sentenced to 11 years in prison.

Nicolas Cage

Nicolas Cage seems to be famous for acting in everything and nothing all at the same time, but he also landed himself in hot water with the IRS on two separate occasions. Apparently, unbeknownst to him, his accountants were deducting personal expenses on his taxes and then didn’t pay taxes on two of his movies at all. This landed him with a massive $6.8 million bill, which he paid off by liquidating some of his swanky real estate.

Willie Nelson

Willie Nelson is well-known for his long, braided hair, bandana headband, crooning western songs, and… tax evasion. Unlike some of the other celebrities, Nelson claimed that he didn’t know that he wasn’t paying taxes, and when everything was tallied, he owed a whopping $16.7 million to the IRS. His lawyer managed to get it whittled down to $6 million, but he still couldn’t pay that amount, so the IRS seized several of his properties and most of his possessions and sold them at auction. Luckily, his friends and family bought most of the items (and subsequently gave them right back to him). That profit, combined with the earnings from his album titled “The IRS Tapes: Who’ll Buy My Memories” and a subsequent tour, paid off the rest of his debts. One thing that wasn’t seized by the IRS: his guitar, “Trigger.”

Martha Stewart

Martha Stewart is best known for her jail time for insider trading, but she was in hot water with the IRS not long before that. Her defense was that, because she didn’t spend much time in her New York home, she didn’t need to pay the property taxes. How wrong she was! She ended up needing to pay more than $200,000 in back taxes for that little oversight.

Tim Geithner

Unless you’re a history or political science buff, this name probably doesn’t ring a bell, but he’s perhaps one of the most ironic tax evaders because he was appointed Secretary of the Treasury under Barack Obama. In case you don’t know, the IRS is part of the U.S. Treasury Department, so what he called “honest mistakes” in his tax record didn’t look good. To be fair, he did pay his back taxes quickly, and the tax discrepancy was a fairly common mistake that happens when you are considered self-employed, but still…

Leona Helmsley

While this is an old case of tax fraud, it certainly is an impressive one. Leona Helmsley was often referred to as “The Queen of Mean” throughout her reign of terror during the 1980s through the 2000s. She and her husband, Harry, owned several high-profile real estate listings as well as a chain of hotels called the Helmsley Hotels. She was famously quoted for saying that “Only the little people pay taxes,” and that mentality cost her dearly.

She was eventually convicted of tax fraud for:

  • Billing her personal clothing to the company budget under “staff uniforms”
  • Using company money for personal luxuries (ex: $1 million marble floor and a $210,000 card table)
  • Buying jewelry in New York but citing Connecticut as her residence and then not paying state sales tax for either state

She was fined millions of dollars for evasion, millions of dollars in back taxes, sentenced to four years in prison, and ordered to perform 900 hours of community service. Incredibly, Helmsley was originally only ordered 750 hours of community service, but when it was discovered that she was having her employees do the work while she took the credit, she was ordered to do 150 more.

After All That…

The IRS has a no-nonsense reputation for a reason: it almost always comes out on top. If you are struggling with tax concerns, contact our team of expert tax relief attorneys. We can help you resolve your tax issues in the most financially advantageous manner and get you back in good graces with the IRS.