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What can celebrity athletes who have experienced run-ins with tax authorities show us?

© Alexey Klementiev/

The colloquial warning “Don’t let this happen to you” contains sage advice when it comes to high wage earners’ problems with taxes. Many high-profile athletes, for instance, have run afoul of the IRS and other taxing authorities. Whether that resulted from poor advice, celebrity ego or a combination of both, there are lessons to be learned to avoid the same mistakes.

  • Consider a well-known baseball player who rose to stardom with the New York Mets, though it was during his tenure with the Dodgers in the ’90s that he was found guilty of tax fraud and tax evasion. He had to pay $350,000 inback taxes and spend three years on probation and six years under house arrest.
  • There was the professional golfer who got into hot water with the IRS to the tune of $2 million, spent a year in jail in 2010 and at 64 years old, is back on the Tour, still having his winnings garnished to pay off his tax debt.
  • And, just at the close of 2015, it was reported that a former Washington Redskins and Denver Broncos running back, despite having made about $43 million during his nine-season NFL career, had to file for bankruptcy due to tax debt.

These examples only scratch the surface; the complete list could read like a “who’s who” of a Hall of Fame or Hollywood A-list.

Some celebrities make the mistake of trusting an unqualified family member or hire CPAs or advisors who haven’t been properly vetted.


So, what do these pro athletes with tax problems have in common? Mostly, the failure to file returns on time, or at all, and to properly report all income. Some may think they can fly under government radar because of theircelebrity status, yet that actually makes them bigger targets. Celebrity athletes also have many avenues of income beyond their salaries, such as royalties and endorsements. Prizefighters and race car drivers who compete for “purses” have specific ways in which they have to account for their winnings. And athletes who play for teams that travel can run into problems with state and local taxation on earnings. These factors are complicated, such that even well-meaning athletes may inadvertently under-report, or fail to report income.

Another trap many sports celebrities fall into is failing to account for income fluctuations. High-earning athletes may make a bundle for a few years and fail to plan ahead for shortfalls when their income changes. This is how they can get into hot water with the IRS, by racking up huge tax debt in the gravy years, and being unable to pay when their income drops off. This is a common reason why celebrities wind up filing for bankruptcy.

Another shared problem is who these men and women select to manage their finances. Some celebrities make the mistake of trusting an unqualified family member, or close friend. But, more often than not, they hire CPAs or advisors who haven’t been properly vetted. That’s like handing the keys to your Ferrari to a kid without a driver’s license!


Effectively managing your money is never easy, and like kids, the more you have, the harder it is to handle. Celebrity athletes often find themselves in trouble with the government for two reasons: They are high-profile targets, and, because of their status, they may feel they are above the law. That hubris then results in their not following the advice of their CPAs and other advisors. The same can be said of any high net worth individual. Your skill and talent is what got you where you are. It is in your best interest to rely on the talents of qualified trusted advisors to help keep you there.

This article was originally published in the February/March 2016 issue of Worth.


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