People often get surprised when they hear about celebrities being punished for tax evasion. One might assume that celebrities with all their popularity are treated differently from other citizens, however our tax attorneys can tell you that nothing could be farther from the truth. For the IRS, everyone is the same and it treats each case purely based on its merit. No inch given, no quarter asked for. The laws are the same for everyone.
That is why it didn’t come as a major surprise when the IRS recently rejected star actor and director, Robert Whitaker ‘s plea that he be allowed to pay back overdue taxes in installments. The tax irregularities in the case of the Award-winning actor have been going on since 2013. Since the court felt that neither the actor or his representative agencies seemed to show any intent that they would ultimately pay up or showed any solid evidence that they could pay the dues, the court ruled in favor of the IRS.
Whitaker and his spouse Keisha’s joint income tax return for 2013 reported a gross income of $1,491,974. The tax liability reported was $426,812. However, only $10,579 was sent as his wage withholding. The actor is also reported to have added another $4,500 as tax payments. The IRS on its part assessed the taxes on Whitaker’s 2013 tax returns on December, 2014. This was not an audit done by the tax collection agency. It was an investigation into tax returns. Subsequently the IRS sent a ‘intent to levy’ notice to the actor.
After receiving the notice, a Collection Due Process hearing was requested by the actor’s representative. The representative cited reasons of the actor’s movie business not doing well, as well as Whitaker’s need to project a lavish lifestyle, for holding onto his position as a leading Hollywood star, which is the only way he would be able to pay his tax dues, as reasons for letting Whitaker pay his tax dues in monthly installments.
The IRS meanwhile checked on Whitaker’s tax liabilities for 2014. It found out that the actor’s wages in the year amounted to $ 1, 865,077 but his reported tax withholding was a mere $2,267. For the tax collection agency, things were seemingly going from bad to worse in this particular case. So, it asked the actor that he better improve his tax withholding, without which he can forget about negotiating an installment deal.
The actor then proposed a 72-month installment plan at $20,000 per month to clear off his IRS liabilities to the tune of $1.2 million, for 2013 and 2014. The IRS wanted the actor to pay $40,000 per month, while also paying his 2014 taxes for the deal to be fixed, which his representative did not agree to.
Subsequently Whitaker reported an income of about $2.5 million for 2014 with a tax due of over $800K. The IRS then made an easement of the actor’s income tax returns for 2014. However, the IRS officer was not aware