Fox News:  “the IRS has filed more than $6.3 million in liens against [Nicolas]Cage for back taxes owed from 2002, 2004, and 2007. . . . But the ‘National Treasure’ star isn’t the first celebrity to owe big money to Uncle Sam.  A few have even spent time behind bars for failing to pay taxes. Hopefully, Nic will avoid that fate and start building up his nest egg with the earnings from the four films he’ll be starring in next year.  In the meantime, maybe he can get a few tips from these celebrity tax evaders.”

The Department of Justice issued a press release today, October 28, 2009, about $3.3 trillion in fraudulent refunds.  In Washington they used to say a billion here and a billion there, pretty soon you are talking about a lot of money.  Now it’s a trillion here and a trillion there.  You have to admire the audacity of the schemers.

The United States this week has filed civil injunction lawsuits across the country against seven individuals, the Justice Department announced today. The federal suits – filed in Los Angeles; Panama City, Fla.; Salt Lake City; Nashville, Tenn.; and Pocatello, Idaho – allege that the defendants promote a tax fraud scheme designed to siphon hundreds of millions of dollars from the U.S. Treasury through fraudulent tax refund claims.

Papers filed in the cases say the defendants prepared tax returns requesting a total of $562.4 million in bogus refunds. One defendant – Dick Jenkins, of Heber City, Utah – allegedly holds himself out as a CPA and requested a $210 million fraudulent refund for one customer. The Internal Revenue Service (IRS) catches the vast majority of the bogus tax returns and blocks the claimed refunds.

Under the tax fraud scheme, known as the “redemption” or “OID redemption” scheme, participants file a series of false IRS forms, including tax returns, amended returns, and Forms 1099 (including Form 1099-OID) or Forms W-2, to request fraudulent tax refunds based on phony claims of large income tax withholding. According to papers filed in these cases and earlier cases against other alleged scheme promoters, redemption scheme promoters are tax defiers who falsely tell customers that the federal government maintains “secret” accounts of money for its citizens. Promoters claim to be able to help customers access the secret funds by filing the false IRS forms.

Altogether, according to the IRS, redemption scheme participants (including customers of the defendants in the seven lawsuits filed this week) have requested a total of $3.3 trillion in fraudulent refunds.

About.com:  “The United States imposes tax on income using progressive rates. That means that a person’s tax liabilities gradually increases as income increases. There are currently six tax brackets, ranging from ten percent to thirty five percent. These six tax brackets are scheduled to expire, along with other tax reforms signed into law under President G.W. Bush, at the end of the year 2010. President Obama has signaled his desire to increase the top two tax brackets, effectively increasing the tax burden on higher income persons.”

2010 Federal Income Tax Rates

Single Filing Status