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Does ‘Dancing with the Stars’ lead to tax woes?

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in Small Business Tax

Pamela Anderson shares something in common with a few fellow celebrity contestants on a recent season of ABC’s “Dancing with the Stars” (DWTS). At least three others also have made headlines for being in hot water with the tax authorities.

Interesting question: Is this a coincidence or do celebrities go on DWTS to earn money to pay their taxes?

Anderson became famous for her role on “Baywatch” and in several movies in the 1990s. However, in early April of this year, the attention she garnered was less flattering. Her name appeared on the California Franchise Tax Board annual list of delinquent taxpayers, which includes 250 taxpayers who owe at least $100,000.

In April 2009, the state filed a $493,144 lien against Anderson. As the news of her tax woes became public, she responded on Twitter:

“I’m not trying to avoid any tax obligation. Certain events occurred, outside of my control, which caused this temporary but embarrassing situation. All of my tax obligations will be resolved in the very near future. Love, Pamela.”

For Anderson, rumors of financial problems started to circulate as her marriage to Kid Rock was ending, with Rock claiming she was interested in him only for his money. Last year, about the same time the lien was filed against her, the construction company renovating her home claimed she owed it $1 million.

Anderson disputed the charges, telling reporters, “I’m financially secure. It is true that I am in a dispute with some of the contractors working on my home. My lawyers are reviewing the work done to see if the bills are fair. If they are, they’ll be paid. If they aren’t, they won’t be.”

What other DWTS contestants have been tapped on the shoulder by the federal or state tax authorities?

In late March, Shannen Doherty was voted off DWTS, just a few days after she was hit with a tax lien for $44,065. Doherty was part of the cast of “90210.” Her representatives told reporters the situation would be “taken care of promptly.”

Pop star Aaron Carter was voted off DWTS last November. Then he went to bat against the IRS over a lien for unpaid tax in the amount of $1,010,635. His manager, Johnny Wright, told reporters his client’s finances had been bungled by other advisors.

“It is unfortunate that while Aaron was a minor, his finances were grossly mismanaged by his previous team which has led to the current situation of which he was unaware of until today,” Wright said. “Aaron is working with a new team to take appropriate actions toward speedy resolution of the matter and looks forward to putting this behind him and moving forward with the next stage of his music career.”

Final example: In early 2009, IndyCar driver Helio Castroneves, who won his stint on DWTS, also won against the IRS. After a six-week trial, Castroneves was acquitted of tax evasion charges related to unpaid taxes on $5.5 million in fees earned from racing and endorsements.

— Adapted from AccountingWEB, Inc., www.accountingweb.com.

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