Celebrity Tax Tuesday - Beanie Baby Founder Didn't Pay Taxes After Making Millions on Crap Stuffed Animals
Remember Beanie Babies? They were those little stuffed animals that had what seemed like rice stuffed in them that cost every parent half their life savings because every kid just had to have every single one and there were like thousands of them which in turn meant your kid cried until he or she had like a thousand over priced pieces of junk which probably cost the company five cents to make but cost you like $10 bucks a pop? Well, last September, Beanie Babies founder H. Ty Warner plead guilty to one felony count of tax evasion and agreed to pay $53 million fine for hiding as much as $106 million in secret Swiss bank accounts and evading about $5.5 million in tax on earnings from the accounts over a 12 year period. Generally that's good for punishment of about 46 to 57 months behind bars.
In a stroke of luck howeva, Federal District Court Judge Charles Kocoras let Mr. Beanie Baby Founder off with NO jail time accompanied by some probation and community service. Judge Kocoras was overly impressed with Mr. Warner's "private acts of kindness, generosity, and benevolence" (Benevolence means "disposition to do good". We looked it up. Seems like a word more appropriately used in 16th century England. Maybe the Judge could have just said "disposition to do good" instead.)
Well, the U.S. Attorney General for the Northern District of Illinois appealed the decision because it believes Mr. Beanie Baby Founder should be sent to the slammer. Prosecutors point out that Mr. Beanie Baby Founder should not be let off the hook because of his "benevolence" and he's not so "benevolent" anyway (Boom, use of the word "benevolence" is back). According to prosecutors, the amount of money donated by Mr. Beanie Baby Founder to charity was actually only $35 million or 2% of his net wealth which would be like someone in an average home donating $1,377 or about $100 a year over a fourteen year period. Meanwhile, Bill Gates, and others, are donating half of their net worth which for Bill is about $38 BILLION DOLLARS!
The appeal of Mr. Beanie Baby Founder's sentence is just underway and it's no sure bet that the Judge's ruling is going to be overturned so Wolf Tax will keep you in the loop. The moral of the story is, don't hide hundreds of millions of dollars overseas and refuse to pay taxes, but if you do, community service might be your worst punishment.
To learn more about our tax services call us at 1-888-WOLF TAX (965-3829).