Sophia Loren and Tax Evasion on This Day in History

 

This Day in History: Italian actress Sophia Loren was jailed in Naples for tax evasion on this day in 1982. Loren joins a long list of people who have been convicted for the same thing. One of the earliest was Chicago gangster Al Capone who was charged with tax evasion in 1931. More recent examples are Wesley Snipes, an actor who was sentenced to three years in jail for this. Baseball star Darryl Strawberry was sentenced to six months of house arrest and ordered to pay $350,000 in back taxes. Because Strawberry still owed back taxes for 1989, 1990, 2003 and 2004, the IRS seized his retirement annuity from the New York Mets in 2014. It was auctioned off for $1.3 million in 2015. Rapper Ja Rule was sentenced to 28 months in jail for attempted illegal gun possession and tax evasion. Baseball great Pete Rose was sentenced to five months in jail and fined $50,000 back in 1990. In the same year country singer Willie Nelson received a $32 million bill in back taxes from the IRS. This was reduced to $17 million, but he still didn't have the money to pay it. The IRS then seized almost all of his assets, but he still had to pay $15 million.

The IRS allowed Nelson to record the album "Who'll Buy My Memories? (The I.R.S. Tapes)" to raise money for his taxes...which he eventually did.

Singer Lauryn Hill spent three months in prison for tax evasion back in 2013.

Billionaire hotel magnate Leona Helmsley was sentenced to four years in prison and 750 hours of community service in 1988 — she served a total of 21 months.

Actor Nicolas Cage owed $13.3 million in taxes (owing to bad management) and this in turn gave us a long list of b-movies he has been starring in since then to pay for this.

In 1997, the former "Hollywood Madam" Heidi Fleiss, was sentenced to 37 months in prison for tax evasion and money laundering.

The largest tax evasion case however was that of Walter Anderson. Anderson, a former telecommunications executive was accused of hiding his earnings through the use of aliases, offshore bank accounts, and shell companies. In 2006, Anderson entered a guilty plea in which he admitted to hiding approximately $365 million worth of income. He was sentenced to nine years in prison, and restitution of $200 million., However, a typographical error in the amount of the federal government's judgment against Anderson prevented him from having to pay the majority of the taxes owed.

There are others, like Irwin Schiff, who refused to pay taxes on principle. Schiff was held in US custody as a political prisoner because he argued that the income tax in the United States is illegal and unconstitutional.

Another tax protestor (and tax prisoner) Larken Rose based his protest on the "861 Argument." The "861 argument" is a statutory argument used by tax protesters in the United States, which interprets a portion of the Internal Revenue Code as invalidating certain applications of income tax. The argument goes that income tax is imposed on "sources" or "items" of “income” - rather than being an excise tax on “income.” Wesley Snipes was a fan of the "861 argument."

Charles Thomas (Tom) Clayton, M.D. also used the "861 argument" in his tax protest, but he ended up serving 5 years in prison in 2006. The "861 argument" has never had a successful defense in court. Of course, it's hard to argue a case for not paying taxes in a venue that is funded by taxes.