Earl Simmons, or the hip-hop artist known as DMX, pleaded guilty to tax evasion charges before a federal judge in New York. Prosecutors alleged that he came up with an elaborate plan to hide millions of dollars in income from the Internal Revenue Service. According to an ABC news report, Joon H. Kim, U.S. attorney for the Southern District of New York said Simmons’ guilty plea is an admission on his part that he did cheat on his taxes.
Significant Back Taxes Owed
Kim said the rapper did so by seeking cash payments and having his royalties sent out to accounts he opened under others’ names. Prosecutors said Simmons “did the right thing” by making this admission and agreeing to pay what he owes in taxes. The 46-year-old Simmons faced 14 counts of tax evasion and surrendered himself to federal officials back in July. IRS investigators launched a probe into his finances and determined that he had not filed personal tax returns for a number of years.
Between 2002 and 2005, Simmons had reportedly earned significant income from record sales and owed about $1.7 million in taxes to the IRS. Simmons’ attorney said his client simply owned up to his mistake, that he did not pay proper attention to his finances and left the burden of tax payment on others instead of taking care of it himself. Simmons could be sentenced to up to five years in prison and could also end up paying financial penalties to the IRS.
What to Do If You Owe Taxes?
A number of people do get a refund from the IRS when they file their taxes. However, people do make a lot of money and fall into high-income brackets may have to pay much more in taxes. It is up to each individual to keep track of his or her finances and pay what is rightfully owed to the IRS. But, if you do owe a significant amount in back taxes, there is no need to panic. Here are a few steps you take if you owe money to the IRS:
- Pay your taxes. If you are able to do so, pay your tax bill as soon as possible. If you are unable to pay it fully, you should pay as much as you can. This will help bring down interest payments or any penalties you are charged for being late on payments.
- Get an extension from the IRS. If you need a little bit of time to get your finances in order, you may be able to get some additional time, particularly if you are able to pay your tax bill in full in 120 days. You may seek this extension on the IRS’s website.
- Pay it off with a monthly payment plan.If you owe the IRS $50,000 or less, you may be able to set up a monthly payment plan with the IRS. You can also use what is known as Form 9465 (Installment Agreement Request) to apply for a monthly payment plan. More information is available on IRS.gov.
- Think about an Offer in Compromise. This is an arrangement with the IRS that allows to you pay off your tax debt for less than the full amount you owe. You will need to provide paperwork to the IRS to show why you cannot pay your taxes in full. Often, you will have to show evidence that paying your taxes in full will cause you financial hardship.
- File Chapter 7 or Chapter 13 bankruptcy.You may be able to discharge some types of tax debts by filing for Chapter 7 bankruptcy. You may also be able to pay off your tax debt through monthly payments in three to five years if you choose to file Chapter 13 bankruptcy.
If you are losing sleep over your mounting tax debt, talk to an experienced Arizona tax attorney who can help you get your affairs in order and secure that fresh start you desperately need.