Tax Evasion and Tax Cheaters
Tax evasion or tax crimes have long been a problem for the IRS. Tax cheats cost both federal and state governments hundreds of billions of dollars per year. It is estimated that the collective cost of tax evasion over the last decade amounts to $3.09 trillion. Ever since the creation of the IRS, the government has continually employed measures to combat tax evasion by attempting to close off loopholes and administer penalties to tax offenders. Learn about the history of the IRS and history of taxes in the United States and see various arguments against taxation.
Income tax has made more liars out of
the American people than golf - Will Rogers
Recently, tax evasion cases have become more and more public. Numerous states, such as California and New York (as well as many municipalities), compile public lists of the biggest tax evaders in their states.
See the latest report on tax crimes.
High-Profile Cases of Tax Evasion in the United States
Tax evasion is an illegal way of not paying taxes; tax avoidance, however, is the ability to reduce your taxes through legal means. This page covers only tax evasion and contains true cases of these crimes.
- In 2021, Oleg Tinkov, a Russian bank founder was sentenced for evading the exit tax upon renouncing his U.S. citizenship. Mr. Tinkov was ordered to pay more than $248 million in taxes and sentenced to time-served and one year of supervised release after he renounced his U.S. citizenship in an effort to conceal large stock gains that should have been reported to the IRS after the company he founded became a multibillion dollar, publicly traded company.
- Jeff Carpoff, the owner of California-based DC Solar, was sentenced to 30 years in federal prison and forfeited $120 million in assets to the U.S. government for victim restitution in 2021, after creating a Ponzi-scheme that involved the sale of thousands of manufactured mobile solar generator units that didn’t exist. He committed account and lease revenue fraud and purchased a sports team, luxury vehicles, real estate and a NASCAR team with the proceeds.
- In 2021, Rossen G. Iossifov, a Bulgarian national who was the owner of bitcoin exchange, was sentenced to 121 months in federal prison for participating in a scheme where popular online auction and sales websites — such as Craigslist and eBay — falsely advertised high-cost goods that did not actually exist. Once victims sent payment for the goods, the conspiracy engaged in a complicated money laundering scheme where U.S.-based associates would accept victim funds, convert these funds to cryptocurrency, and transfer the cryptocurrency to foreign-based money launderers.
- On October 15, 2020, Texas billionaire Robert Brockman was charged by federal prosecutors in a $2 billion tax fraud scheme. This is the largest tax fraud case brought against an American citizen. Brockman is alleged to have hidden over 20 years of capital gains income via offshore and secret bank accounts. Brockman, who is the CEO of the software company Reynolds and Reynolds Co. has been charged with tax evasion, wire fraud, money laundering, and other offenses.
- Rapper Lil Wayne has three separate tax liens against him: $1.13 million in December 2010 for Tax Years 2004, 2005, and 2007; $5.6 million in 2011 for Tax Years 2008 and 2009; and $7.72 million, which he paid at the end of 2012. As of 2019, he has settled his tax debt with the IRS.
- Fitness guru Richard Simmons owes the IRS about $24,000 covering Tax Years 2007-2015.
- Cornell Iral Haynes Jr. (AKA rapper Nelly) owes the IRS more that $2.4 million. Though his fans try to get him out of debt by streaming his songs online, the IRS is considering another option: use the ticket sales he collects from his latest tour to pay off the debt.
- Reality TV start Michael "The Situation" Sorrentino served eight months in federal prison for filing fraudulent tax returns with his brother and not paying taxes on $8.9 million earned between 2010 and 2012. They created nonexistent business to exploit Sorrentino' celebrity status.
- William Leonard Roberts II (AKA record executive and rapper Rick Ross) paid the IRS over $4 million to settle a 2012 tax debt. The IRS The IRS sent him a notice in 2016 about the debt, demanding him to pay the debt or they would seize his assets.
- Singer-rapper Trey Songz received a tax lien from the IRS on October 8, 2015 over taxes he did not pay for his 2013 income. He paid $750,000 to the IRS on October 28 to cover his $748,870.08 debt.
- Actor Dustin Diamond of "Saved by the Bell" fame owes Wisconsin $93,768 in back taxes.
- In 2014, the IRS filed a $369,249 tax lien against singer-actress Vanessa Williams for unpaid 2011 taxes.
- H. Ty Warner, creator of the famous 90s plush toy Beanie Babies, pled guilty in January 2014 to tax evasion of $25 million using Swiss bank accounts, but was able to avoid a prison sentence. Warner was given leniency by the judge for his philanthropic activity and charity donations. He agreed to serve two years’ probation, perform 500 hours of community service, and pay $27 million in back taxes and interest. He also agreed to pay a civil penalty of more than $53 million.
- In 2008, former businessman William Berroyer was settling a repayment deal with the IRS for his $60,000 tax bill when he tripped and fell over a telephone cord in a Hauppauge, NY IRS office. He spent 17 days in hospitals and rehab clinics for his injuries, and sued the IRS for $10 million (claiming that the injuries prevented him from enjoying his favorite activities). A judge ruled in favor of Berroyer in 2014, but reduced his payment to $862,000. In addition, Berroyer's tax bill was waived.
- Lauryn Hill, a 90’s Grammy-winning singer, was convicted in May 2013 of failing to pay nearly $1 million in taxes. She served her sentence and was released on October 2013 from her three-month sentence at a federal prison in Connecticut. The singer was allegedly unable pay her taxes due to a period of time when she was inactive as a musician.
- In 2013, the Pennsylvania Department of Revenue filed a $39,000 tax lien against former reality TV star Jon Gosselin for taxes he did not pay in 2009.
- Legendary R&B singer Dionne Warwick filed for bankruptcy in 2013 after she battled the IRS for years over $10 million worth in tax debt dating back to 1991.
- Former NFL player O.J. Simpson has found himself in hot water numerous times. He was accused of murder, acquitted, but then found liable in a civil suit. In 2008, he was sentenced to 33 years in prison for the robbery and kidnapping of a sports memorabilia salesman. In addition, he hasn't paid any taxes since 2007 according to the IRS, and he reportedly owes almost $180,000. The IRS filed a second lien in early 2013, covering $17,015.99 in income taxes for 2011.
- The IRS has filed two tax liens on comedian Katt Williams: one in 2012 for failing to pay $3.2 million for 2008 and $829,352 for 2009, and another in 2010 for failing to pay $284,000.
- In 2012, the IRS filed a tax lien on legendary singer/songwriter Lionel Richie for $1.1 million in unpaid taxes from 2010.
- Krystle Marie Reyes fraudulently filed an Oregon state tax return in 2012 that reported $3 million in earnings. She managed to receive $2.1 million in tax refunds through state-issued refund debit cards. Then, she proceeded to go on a shopping spree, spending her fraudulently obtained refund money at a rate of tens of thousands of dollars per week. This case is considered to be one of the largest instances of tax fraud in the history of Oregon.
- Plaxico Burress, a Super Bowl champion wide receiver, had a federal tax lien filed against him in 2012. The IRS said he and his wife did not pay income taxes in 2007 and 2009, leaving an outstanding bill of $98,064.76. He was also the target of a New York state lien, alleging he owed $59,241 in unpaid income tax for 2007.
- Stephen Baldwin, who made his name in movies and reality TV, was arrested in December 2012 and charged with failing to pay more than $350,000 in New York state income taxes. In addition, he reportedly did not file tax returns for 2008, 2009, and 2010. By pleading guilty to one count of repeated failure to file and paying $100,000 to New York in restitution, he avoided prison time. He submitted his final payment of $100,000 in April 2014.
- The IRS seized actress Lindsay Lohan's bank accounts due to her unpaid tax debt. Fortunately, the IRS released her from a tax lien in 2012 when she was able to pay off her 2009 using a $100,000 check actor Charlie Sheen gave to her. However, debts from 2010 and 2011 remain, but her business manager reportedly said he is working on a settlement to pay off the six figure balance.
- In 2009, professional race car driver Hélio Castroneves was charged with filing years of false tax returns and evading $80 million in income taxes. His defense attorney does not deny the charges, but says that the racer is not to blame due to a brain injury which had compromised his decision-making abilities.
- In 2009, Floyd Mayweather Jr. , a successful boxer with a history of tax problems, was given a $5.6 million bill by the IRS for unpaid taxes. He has agreed to pay them since then.
- Actor Nicolas Cage failed to pay $6.2 million in taxes on the $24 million he earned in 2007. He claimed that his accountant made mistakes. In the end, he had to sell several of his houses, a castle, and comic books to obtain the money to pay back the IRS.
- Walter Anderson is known for attempting to rescue Russia's Mir Space Station by turning it into a tourist attraction. However, he was charged with hiding about $365 million from businesses he led through corporations in Panama and the British Virgin Islands. In 2006, he pleaded guilty, was sentenced to nine years in prison, and was ordered to pay $200 million to the IRS.
- Wesley Snipes, an actor who starred in several movies in the 90's and early 2000's, failed to pay taxes from 1999 to 2004. He tried to make the claim that he was a resident alien of the United States (he failed to realize that they have to pay taxes too). Naturally, because he was born in Florida, the IRS didn’t accept his claim and he was sentenced to three years in prison. He managed to get out on bail, but he still owes the IRS $23.5 million in taxes after the IRS denied his offer in compromise to pay 4% of his debt (about $850,000) twice.
- Ron Mix, a Pro Football Hall of Fame member, is facing up to three years in prison after pleading guilty to a Missouri tax fraud charge. He agreed to pay the IRS about $50,000 for one count of making false statements on a tax return. The statements are related to illegal payments he submitted as a San Diego lawyer to a non-lawyer for client referrals. Mix donated about $155,000 over a three-year period to a charity the non-lawyer operated, and Mix reported the payments as charitable deductions.
- Busta Rhymes, a rapper who rose to fame in the mid-90's, is facing two tax liens from the Department of Treasury: $611,000 for 2008 and $178,000 for 2012. Altogether, he owes the IRS nearly $800,000 in unpaid taxes.
- In the mid 2010's, Paul Daugerdas was given a 15-year prison sentence due to helping clients evade taxes. This was done by creating a fraudulent tax shelter which would create fake losses, thus reducing tax bills, of the wealthy. This shelter generated at least $7 billion in losses, resulting in a loss of $1.6 billion of tax revenue.
- Popular R&B singer R. Kelly gained his fame in the 90’s and early 2000’s and sold an estimated 50 million records worldwide, earning him a great fortune. However, he failed to pay his taxes between the years 2005 and 2010 and reportedly owes $4.8 million for that time period. In addition, he owes nearly $1.4 million for 2011.
- American skier Lindsey Vonn and her estranged husband reportedly owed $1,705,437 in back taxes from 2010, the year she won the gold medal during the Vancouver winter Olympics.
- Kevin Federline, the ex-husband of famous pop star Britney Spears, faces a $57,615 tax lien filed by the IRS for unpaid taxes in 2009 and 2010.
- Bronx-born rapper Fat Joe (Joseph Cartagena) faces up to two years in prison, as well as a fine of $200,000 plus IRS penalties and court costs, after pleading guilty to failing to file tax returns in 2007 and 2008, when he made almost $3 million.
- Ja Rule (Jeffrey Atkins), a moderately successful rapper and actor, was charged with three counts of tax evasion for neglecting to pay his taxes from 2004 to 2006. He served 28 months in prison.
- Allegedly, Flavor Flav (William Jonathan Drayton, Jr.), frontman of hip hop group Public Enemy, owes $906,250.56 in back taxes from 2004-2006.
- Pete Rose, a famous baseball player, was accused of betting on baseball games, which he adamantly denied, but was later found guilty. In addition, the IRS accused him of not reporting income from special appearances and autographs, which led to a $50,000 fine and 1,000 hours of community service. In 2003, he was found guilty of not paying taxes again, and had to pay $154,000 and sell his condo in Los Angeles.
- Famous bounty hunter and reality TV star Duane “Dog” Chapman reportedly owes the IRS $2 million in unpaid taxes dating back to 2002.
- Daytime TV host and home guru Martha Stewart failed to pay $220,000 worth of taxes on an estate she owned, claiming that she wasn’t there enough, so she shouldn’t pay them. The IRS disagreed and forced her to pay the amount in 2002.
- Actor and comedian Chris Tucker reportedly owes the IRS over $14 million in unpaid taxes, dating back to 2001.
- Richard Hatch, a contestant on the popular reality TV show Survivor, neglected to pay income taxes on the $1 million prize he won on the game show in 2000. He was found guilty and sentenced to time in prison. After his release he was sent back to prison, this time for violating the terms of his release by failing to file his income taxes again. He claimed that he was innocent and was being discriminated against because he is gay.
- Former Washington D.C. mayor (and current council member) Marion Barry was accused of failing to pay his taxes after he left his post as mayor in 1999.
- Famous real estate investor Leona Helmsley was convicted of tax fraud in 1992 for claiming $2.6 million in ineligible business expenses. Helmsley served 18 months in prison, two months on house arrest, and one online in a halfway house. She reportedly said, “We don’t pay taxes, only little people pay taxes”.
- Despite selling 50 million records, thanks to his 1990 rap hit "U Can't Touch This," MC Hammer owes the IRS and the state of California a total of $671,000.
- In 1990, famous country singer Willie Nelson owed the IRS $16.7 million in unpaid taxes. The IRS proceeded to seize most of his possessions, but that wasn’t enough to cover the amount he owed. He released an album specifically to raise money to pay off his tax debt. Interestingly enough, most of his possessions that were seized by the IRS were later bought at auctions by his fans and friends who were more than happy to return them to him. After he paid back the IRS, he sued his accounting firm for an undisclosed amount, blaming them for his troubles.
- Rock n roll legend Chuck Berry spent most of his time on tour in the 1970’s and was paid in cash for his performances. The IRS charged him with failure to pay taxes on those earnings (totaling $110,000) and he pled guilty in 1979. He was sentenced with 4 months in prison and 1,000 hours of community service, which he fulfilled by performing benefit concerts.
- Comedian Richard Pryor spent 10 days in jail in 1974 for not paying his taxes. During his trial he told the judge that he forgot to pay them.
- In 1973, 39th U.S. Vice President Spiro T. Agnew was the second vice president to resign from office after being charged by tax fraud, conspiracy, and bribery. After U.S. attorney George Beall opened an investigation in Baltimore City, which Agnew was rumored to be involved in, Agnew was charge with accepting bribes of more than $100,000. At first, he refused to resigned if he was indicted. However, he agreed to eventually resign. He received three years' probation and was fined for $10,000.
- IRS commissioner Joseph D. Nunan, Jr. made (and won) a $1,800 bet that Harry Truman would win the presidential election. However, he neglected to report those winnings when filing his taxes. In 1952, his story became public and he was convicted of tax evasion.
- Famous and ruthless gangster Al Capone ran a bootlegging business during Prohibition, and that brought him incredible profits, but he concealed them from the IRS. When he was captured and put on trial for handgun charges, the IRS was able to prosecute him for tax evasion, and in 1931 he received a sentence of 11 years in jail. He was also charged with $7,692 for court costs, fined for $50,000, and paid $215,000 and interest on his back taxes.
Other Notable Cases of Tax Evasion and Tax Delinquency in the U.S.
- An Italian restaurant owner in New Jersey admitted in July 2020 to false reporting of his taxable income on his IRS individual and corporate tax returns for Tax Years 2014-2018. He failed to report $404,654.39 on his individual returns and $459,388.37 on his corporate returns. He owes $185,000 in individual and coporate taxes.
- In December 2019, an Alpine property owner from Phoenix, Arizona was found guilty of tax evasion and failing to file tax returns since 1995. The indictment states that he chose to spend his money on his lifestyle instead of reporting his income and paying taxes to the IRS (he owes $765,429.22). He is set to be sentenced to prison time in June 2020 based on the one tax evasion count and three counts of failing to file tax returns. He pleads not to receive prison time due to him feeling “very remorseful and embarrassed” about the situation and going into a final payment agreement with the IRS to fulfill his obligations.
- A man from Philadelphia, PA will spend seven years in prison for filing 1,217 fraudulent federal tax returns between 2008 and 2013. After obtaining names, dates of birth, and Social Security Numbers of children in foster care, he used the information to claim them as dependents on false tax returns for himself and his clients. The IRS lost approximately $7,972,093.
- A Las Vegas, Nevada dentist was sentenced to 13 months in federal prison for evading taxes in a nine-year time span (creating a $600,000 tax loss). He admitted to using bank accounts and trusts to hide his income and filed false tax returns for Tax Years 2008-2011. He was ordered to serve three years of supervised release and pay $712,280 in restitution.
- In Pittsburg, Pennsylvania, a donut chain owner was charged with filing a fraudulent 2010 tax return and concealing assets from a bankruptcy court. On the return, he reported that he earned $16,000 when he actually earned $194,000. He is also accused of hiding income from the business in a 2011 Chapter 7 bankruptcy filing.
- A St. Louis, Missouri tax preparer pleaded guilty for overstating business expenses on a client's tax returns. According to an IRS investigation, he also prepared false 1099 forms and check schedules to support the overstatements. The client also pleaded guilty since she agreed to leave the overstatements in her returns.
- In New Mexico, a former office manager of a surveillance equipment company was sentenced to 366 days in prison for federal tax evasion. It was related to an indictment filed in September 2014 charging her for not reporting the correct income in her 2009-2012 tax returns. She admitted to writing checks to herself from the company and not reporting the income as compensation on her returns. She was also ordered to pay $170,000 in taxes and a $100,000 fine to the IRS.
- New York releases a list of delinquent taxpayers every year, dividing it into individual and business categories. The largest business delinquent taxpayer is a New York City-based company that owes $14.6 million to the state.
- A New York construction company specializing in home remodeling owes the state around $8.2 million in unpaid taxes.
- A communications company owes the state of Florida around $2.5 million in unpaid taxes.
- A donut chain owner in Westchester County, New York reportedly owes the state around $2.2 million in unpaid taxes.
- A fast food chain franchise operator owes $1.7 million in unpaid taxes. In 2008, he filed for bankruptcy, owing millions to sources other than the state of Florida.
- There is a man who owes the District of Columbia $1.17 million in unpaid taxes.
Infamous International Tax Evaders
- In 2019, the Tasmanian supreme court ordered Australian honey farm owners Fanny Alida Beerepoot and Rembertus Cornelis Beerepoot to pay $2.3 million after the owners claimed that everything they own belongs to God and they don't have to pay taxes on their land. The judge disagreed saying the Bible does not include a passage saying "thou shall not pay tax."
- Spanish prosecutors charged Colombian music artist Shakira in 2018 for not paying 14.5 million euros ($16.4 million) to the Spanish Tax Agency between 2012 and 2014. During that time, she mostly lived in that country when she had an official residence in Panama. Her public relations firm stated that she has fulfilled all her tax obligations for the countries where she worked.
- In 2014, Swiss bank Credit Suisse plead guilty to criminal charges of helping wealthy Americans file false U.S. tax returns and hide billions of dollars from U.S. tax collectors into overseas bank accounts. This deed will cost the banking giant $2.6 billion in fines. Credit Suisse is the largest bank in 20 years to admit these charges publicly.
- Italian fashion designers Domenico Dolce and Stefano Gabbana were sentenced to a prison term of one year and eight months in June 2013 for hiding hundreds of millions of Euros. However, Italian law states that people with sentences of less than two years do not actually have to go to prison to serve their sentence. In October 2014, Italy's highest court overturned the sentences.
- Famous 80’s movie star Paul Hogan was linked with Australia’s 300 million dollar tax evasion probe which involved 23 companies, including one that he owns. The Australian Taxation Office claimed that he owes as much as 37.5 million Australian dollars in unpaid taxes and banned him from leaving Australia without first paying his taxes. Since then, he has been allowed to leave Australia as part of a deal, and in early 2011 he decided to sue the Australian government over false accusations of tax evasion, which he claimed damaged his reputation. In 2012, the issue was resolved on a "without admission" basis.
- Octogenarian New York resident and former USB customer Ernest Vogliano was accused of conspiring with the Swiss bank to hide $4.9 million in a foreign account between 2000 and 2002 to avoid paying taxes. He was convicted on five counts of filing false income tax returns and was forced to pay a fine of $940,381.
- In early 2000’s, former Number 1 German male tennis player Boris Becker was accused of living in Germany while claiming to live in Monte Carlo, and thus not paying 1.7 million Euros in taxes to the German government from 1991 to 1993. He admitted to tax evasion, and received a $500,000 fine and 2 years of probation. He later moved to Switzerland to avoid paying taxes.
- William H. Millard, founder of 1980's computer retail chain ComputerLand Corp., reportedly owes over $100 million in unpaid taxes to the IRS. After selling the company in the late 1980's he moved to the Northern Mariana Islands, which is a U.S. commonwealth. He never reported his income to the IRS while in the commonwealth, and thus paid no taxes during that period. Soon after he disappeared, and it is reported that he now resides in the Cayman Islands, a notorious tax haven.
- In 1982, Italian actress Sophia Loren served 18 days in prison for tax evasion.
While some people avoid taxes by not paying them, others go to the court of law to present strange and often incorrect legal and constitutional arguments trying to claim that taxation is illegal. Learn more about strange and absurd arguments against taxation.
Here are some strange and unusual taxes throughout history and around the world.
Read about unpleasant IRS tax experiences.
Detailed overview of tax history in the United States and the world.
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