Lessons you can learn as the IRS says Chrisley doesn’t know better
The federal trial against reality TV stars Todd and Julie Chrisley began in Atlanta, Georgia last week. Todd Chrisley, known for his brutal parenting style, “tell it like it is” on USA Network’s “Chrisley Knows Best,” wouldn’t have been so easy with his finances.
Prosecutors say the Chrisleys conspired to defraud banks by using false information to obtain a bank loan and failed to pay taxes on their earnings. In 2019, a federal grand jury charged the pair on multiple counts of conspiracy, bank fraud, wire fraud and tax evasion.
U.S. Attorney Byung J. “BJay” Pak said at the time of the indictment“Celebrities face the same justice as everyone else.”
This justice could involve anything from audits and liens to prosecution and jail time. While regular taxpayers like you and I might not have as many zeros to manage in our bank accounts, we have the same basic reporting and filing obligations. Here are some lessons you can learn from reality stars who’ve had a run-in with the IRS.
It is important to file your tax returns on time.
Despite publicly displaying their wealth, the Chrisleys reportedly failed to file timely tax returns for several years. If this story sounds familiar to you, you are not imagining it. Some of the charges mirror those previously directed at “The Real Housewives of New Jersey” stars Teresa and Giuseppe “Joe” Giudice. The Guideces made the news in 2013 when they were charged on dozens of counts, including conspiracy to commit mail and wire fraud, bank fraud, misrepresentation on loan applications and fraudulent bankruptcy, while spending lavishly on camera. The charges also include separate charges for Joe for failure to file federal income tax returns. After initially pleading not guilty, the couple pleaded guilty to numerous charges, with Joe also admitting his failure to file a tax return.
In 2014, Teresa was sentencedto 15 months in federal prison while Joe was sentenced to 41 months – both were also ordered to confiscate assets and pay fines. In 2019, Joe, who was not a US citizen, was deported to Italy.
Penalties for willful failure to file a federal income tax return under Chapter 7203 of the Tax Code may include fines, imprisonment or both. For taxpayers who simply miss the deadline, things are a little easier, usually resulting in a financial penalty 5% of unpaid taxes for each month or part of a month you are late filing your tax return, up to 25% of your unpaid taxes. The easiest way to avoid such problems? File your tax return on time, getting an extension if you need it, even if you can’t afford to pay.
Rely on trusted advisors, but follow up.
The Chrisleys have been charged alongside their former accountant, Peter Tarantino, who faces one count of conspiracy to defraud the United States and two counts of willfully filing false tax returns. Tarantino’s attorney claims the number cruncher was not a criminal, just unqualified, noting that he had failed the CPA exam multiple times in 20 years and was “above his game.” head” when it came to finances.
Blaming advisers for financial and tax troubles is nothing new — in 2011, Ozzy and Sharon Osbourne of MTV’s “The Osbournes” were shocked with a $1.7 million tax lien. Sharon Osbourne suggested to fans that her tax troubles resulted from mistakes made by someone she paid to handle her financial affairs, tweeting:
Just because you’re paying someone doesn’t mean they’re doing the job right.
— Sharon Osbourne (@MrsSOsbourne) April 11, 2011
Osbourne followed a few days later, Tweeter, “You can only rely on yourself. You have to be on top of your own business. My fault…….lesson learned.
The Osbournes, who were charged with no wrongdoing, paid the lien.
You should indeed be able to trust those you hire, but it’s a mistake to just hand over your financial keys and walk away. When you sign a tax return or other financial document, your signature matters. Review what you sign and ask questions. And if you don’t understand, ask again.
The feds allege the Chrisleys hid money from the IRS rather than pay taxes. The indictment claims the couple did not file or pay at all for the 2012 to 2016 tax years, despite having available resources. In a February 2017 interview, Chrisley claimed, “Obviously the feds like my tax returns because I pay $750,000 to $1 million pretty much every year, so the feds don’t have a problem with my taxes. However, the indictment claims that they made substantial personal expenses on clothing and other items, instead of paying their taxes.
Similarly, Mike “The Situation” Sorrentino of MTV’s “Jersey Shore” was accused of taking money from businesses he controlled to pay for personal expenses such as “high-end vehicles, shopping high-end clothing and personal care expenses,” but claimed that these were legitimate business expenses.
Sorrentino and his brother, Marc, both pleaded guilty to tax evasion charges in 2018 and were sentenced to jail and restitution.
The IRS is ready to work with you if you cannot pay your taxes because you are having financial difficulty. This can range from a temporary suspension of collection activity – sometimes called “currently uncollectible” – to a payment plan or other agreement, such as an offer in compromise. But they expect you to be honest about your resources – lying to avoid paying your taxes. can get you in big trouble.
The Chrisley trial is ongoing and Todd and Julie Chrisley have pleaded not guilty to all charges.
In 2019, Todd took to Instagram to answer the charges, blaming a former employee for revenge. At the time, Todd declared that “once we had a chance to explain who he was and what he had done to us, they [the US Attorney’s office] realized it was all just a bunch of nonsense and they sent him on his way. Obviously, that didn’t happen.
IRS warns taxpayers
After the indictment was announced, Thomas J. Holloman III, special agent in charge of the Atlanta field office, said the case should serve as “a notice that the Internal Revenue Service has zero tolerance for people who try to evade their tax responsibilities”.
That’s good advice, given that the IRS typically targets people suspected of willful behavior. Holloman explains, “This action is also part of a much larger and coordinated effort by the IRS and the Department of Justice to find and aggressively crack down on individuals who attempt to conspire with others to hide their income, then lie to federal agents when confronted. Honest, law-abiding taxpayers are fed up with those like those who use deceit and fraud to line their pockets at their expense.
This is a regular column from Kelly Phillips Erb, the Taxgirl. Erb offers commentary on the latest tax news, tax law and tax policy. Look for Erb’s column each week in Bloomberg Tax and follow her on Twitter at @taxgirl.