Don't Mess With Taxes

Honestly, rich people. You can afford to hire good tax advisers and accountants. Why don't you?!?

That's the question I ask every time another celebrity gets in trouble with the Internal Revenue Service.

Last week it was boxer Floyd Mayweather Jr. Now the latest wealthy person who just can't get a grip on taxes is hip-hop icon DMX.

Although rapper DMX seemed pretty composed after his court appearance last week on tax evasion charges, I suspect at some point this was his reaction to the federal charges.

The 46-year-old rapper, whose legal name is Earl Simmons, is accused of 14 tax fraud and evasion charges.

Federal prosecutors contend that from 2002 through 2005, Simmons cheated Uncle Sam out of $1.7 million. If convicted of them all, he could face up to 44 years in jail

Both the amount of the alleged unpaid tax bill and the potential maximum jail sentence are impressive. This week's By the Numbers nod, however, goes to DMX's almost $2 million allegedly unpaid tax bill.

Simmons/DMX turned himself in to authorities and pleaded not guilty to the charges in a New York federal courtroom on Friday, July 14. He was released after posting a $500,000 bond.

Accused of hiding earnings: The Department of Justice (DoJ) also contends that Simmons earned more than $2.3 million from 2010 through 2015, but did not file personal income tax returns during that time period.

In fact, according to the announcement of the charges against Simmons/DMX issued by the U.S. Attorney’s Office for the Southern District of New York, Simmons "went out of his way to evade taxes, including by avoiding personal bank accounts, setting up accounts in other's names and paying personal expenses largely in cash."

Federal investigators also allege that Simmons owes taxes on the $125,000 he received in 2011 and 2012 from his participation in the reality show Celebrity Couples Therapy. Normally, the taxes on that money would have been withheld from any checks issued to Simmons.

However, the DoJ says Simmons "even allegedly refused to tape the television show … until a properly issued check he was issued was reissued without withholding any taxes."  

"Celebrity rapper or not, all Americans must pay their taxes, and together with our partners at the IRS, we will pursue those who deliberately and criminally evade this basic obligation of citizenship," added Acting U.S. Attorney Joon H. Kim.

The multi-platinum hip-hop artist appears to be taking the tax charges in stride.

"It's allowed me to not be scared of the situation and face it head-on, you know what I'm saying?" Simmons told reporters outside the courthouse. "My life is in God's hands."

Official charge breakdown: Specifically, the DoJ charged Simmons/DMX with —

• One count of corruptly endeavoring to obstruct and impede the due administration of Internal Revenue Laws,
• One count of evasion of payment of income taxes,
• Six counts of evasion of assessment of income tax liability and
• Six counts of failure to file a U.S. individual income tax return.

The tax law obstruction count carries a maximum sentence of three years.  Counts two through eight each carry a maximum sentence of five years.  Counts nine through 14 each carry a maximum sentence of one year. 

The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant would be determined by the judge.

Rise and fall: Simmons' career as DMX took off in 1997 when he released a series of immediately popular hip-hop albums. Many of the albums went platinum and they and their individual songs topped musical charts.

"X Gon' Give It to Ya" is one of DMX's biggest hits. It was specifically cited by federal law enforcement official in the announcement of tax evasion charges filed against the rapper.

The tax charges are not Simmons' first scrap with the law. In 2015, the Yonkers native spent two months in a New York jail for failing to pay child support.

Long list of alleged tax cheats: And, as I noted at the start of this post, he's far from alone in facing tax charges.

A few day before the tax evasion charges against DMX were made public, AMLAlert, the Twitter account that highlights the European Union's anti-money laundering (AML) efforts, posted a graphic of 10 celebrities who, over the years, have had tax troubles.

They include Stephen Baldwin, Nicolas Cage, Joe Francis, Leona Helmsley, Lauryn Hill, Fat Joe, Ja Rule, Wesley Snipes, my fellow Texan Willie Nelson and, from the international tax world, fashion design team Dolce and Gabbana.

Again, rich people, use some of your wealth to hire competent tax advisers!

You also might find these items of interest:

• Lindsay Lohan hit with $93,000+ IRS lien
• Messi fans support his play, but not his tax moves
• Sophia Loren cleared of almost 40-year-old tax evasion charge