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Celebrity Tax Woes Bookend October 2018: Mike “the Situation” Sorrentino and Wesley Snipes Take a Hit

Celebrity Tax Woes Bookend October 2018: Mike “the Situation” Sorrentino and Wesley Snipes Take a Hit

The month of October began and ended with two celebrity names receiving unfavorable news in their tax controversy matters. On October 5th, Michael “the Situation” Sorrentino, of “Jersey Shore” acclaim, and his brother received prison sentences in Newark, New Jersey federal court. To round the month out, on November 1st, Wesley Snipes lost his Tax Court battle in which he alleged the IRS abused its discretion in not accepting his offer-in-compromise.

Mike Sorrentino (“The Situation”) Has More on His Agenda Than Gym, Tan, Laundry: Tax Evasion & Structuring Charges Create a Legal Situation

Mike Sorrentino (“The Situation”) Has More on His Agenda Than Gym, Tan, Laundry: Tax Evasion & Structuring Charges Create a Legal Situation

Michael Sorrentino, better known as “The Situation” on MTV’s popular reality show The Jersey Shore, was recently hit with a superseding indictment issued by the grand jury on April 7, 2017. The Situation had previously been charged, along with his brother, on September 24, 2014 with tax evasion and conspiracy to defraud the IRS. Prosecutors allege that Sorrentino and his brother set up multiple businesses to profit from The Situation’s celebrity status during the heyday of The Jersey Shore phenomenon, and that they conspired to avoid paying tax on nearly $9 million earned just in the 2010-2012 period. According to the indictment, The Situation and his brother filed false returns claiming fraudulent deductions and underreporting business income, particularly by using S-corporations and non-issuance of 1099s to hide income, all the while using income from those businesses to fund their extravagant lifestyles, including the purchase of luxury vehicles.

Recent TIGTA Report on Criminal Enforcement Against Employment Tax Noncompliance Criticizes IRS for Ineffectively Addressing Employment Tax Crimes, Offers Lessons to Employers/Responsible Parties Under Audit or In IRS Collections

On March 21, 2017, the Treasury Inspector General for Tax Administration (TIGTA) issued a report titled, “A More Focused Strategy Is Needed to Effectively Address Egregious Employment Tax Crimes.” The Report noted that, as of December, 2015, 1.4 million employers owed approximately $45.6 billion in unpaid employment taxes, interest, and penalties. The report indicated that in 2015, the IRS assessed the TFRP against 38% fewer responsible persons than just five years before (asserting the TFRP against just 11% of responsible individuals), and that simultaneously the number of employers with egregious employment tax noncompliance (20 or more quarters of delinquent employment taxes) has tripled in a 17-year period. TIGTA was concerned that, despite this noncompliance, there are fewer than 100 criminal convictions for employment tax violations per year.

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