The IRS files federal tax liens against taxpayers in Suffolk County whom they believe are dodging their tax obligation. This action usually comes after years of letters and warnings have failed to get the money. According to the IRS, a federal tax lien is a legal claim against all your property including your real estate, financial assets and other personal property.
A federal tax lien is often an indication of greater financial problems. Skipping payments or not filing with the IRS at all is the worst thing you can do. The penalties can go as high as 50 percent of what you originally owed, and then the IRS adds interest to the unpaid tax and penalties.
Where celebrities get in trouble is when they expect their peak earnings years to continue forever. They buy an expensive house, then the next year, record sales drop and they can’t afford the taxes on their big new house. Some names in the news lately with federal tax liens include:
- Lindsey Vonn – the IRS filed a $1.7 million tax lien against the World Cup and Olympic champion skier last month. She paid her debt within two weeks.
- Lionel Richie -The IRS placed a $1.1 million lien on the top-selling recording artist for unpaid taxes in 2010.
- Lindsay Lohan – the actress and tabloid star owes nearly $250,000 to the IRS.
- Roberta Flack – the soul singer has $156,824 in federal tax liens.
- Willie Nelson – the country singer/songwriter lost nearly everything during a 1991 IRS auction. He hid his guitar.
- Sinbad – the comedian owes the IRS more than $8 million in taxes and penalties and filed bankruptcy.
- Robert Downey Jr. – the actor fell behind on both his state and federal taxes while serving time in jail. He has since paid off more than $2 million in debts.
Source: usatoday.com, “Celebrities are often in debt to the tax man,” Dennis Cauchon, April 17, 2012