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It's been nearly 20 years since a former housekeeper of Leona Helmsley infamously testified that the wealthy real estate investor claimed that "only little people pay taxes."
Helmsley was subsequently charged with tax evasion – due to her attempt to claim as business expenses renovations on her Connecticut home – and ended up serving 18 months in federal prison.
When it comes to shorting Uncle Sam at tax time, Helmsley is certainly not alone. Throughout the history of the tax system, tax collectors have grabbed headlines in their quest to make sure that VIP status does not preclude the payment of taxes.
The most famous case is no doubt that of Al Capone, who, in 1931, was convicted on tax evasion charges stemming from his organized crime earnings. Agents from the Internal Revenue Bureau (as the agency was known then) determined Capone failed to report more than $1 million in income and proposed taxes and penalties of nearly $385,000. Documents released by the IRS earlier this year offer a new glimpse into the tax case – and into the danger involved with the investigation that eventually took down Capone.
Capone served six-and-a-half years of an 11-year sentence. He was released early for good behavior.
Like Capone, illegal activities are often the reason taxes go unpaid. For example, in 2002, a jury found that Rep. James Traficant (D-OH), did not pay taxes on kickbacks and bribes. Traficant was expelled from the House and sentenced to eight years in federal prison.
Madam to the stars Heidi Fleiss was sentenced to 37 months for tax evasion and money laundering tied to her high-end prostitution service.
Still others claim they got bum tax advice.
Most recently, Wesley Snipes got into tax trouble after his accountants told him that Americans are not required to pay federal income taxes. Snipes was required to pay $17 million in back taxes plus penalties and interest.