While all of us would like to have more money, few of us like the idea of having to pay taxes and deal with the IRS in connection with that wealth. For better and for worse, those with significant wealth also end up owing significantly more taxes and having more potential to catch the attention of the IRS. A good example of this is actor Robert Redford, who is currently suing the state of New York in connection with a tax bill. The bill, which goes back to 2005, is for a total of $1,568,470, nearly half of which is for interest.
The bill is connected to the sale of Redford’s ownership stake in the Sundance Channel, which features independent films. Redford, who didn’t even know about the bill until recently, argues in his suit that he is being subjected to double taxation and that he already paid taxes for the sale in Utah, since all operations are based in Utah.
What is interesting is that New York tax authorities looked at papers for a company transaction made in 2008 and approved it; which is part of why it is so odd that now Redford is being hit with such a large bill and massive interest. In his complaint, he asks that the tax bill be entirely thrown out.
We’ll have to wait and see how Redford’s case turns out, but it is worth noting that the IRS doesn’t always do precision work. In some cases, tax officials get it wrong and it then falls on the taxpayer to correct the problem, sometimes even in court, as in Redford’s case. When this happens, it is important to work with an experienced tax attorney who knows the ins and outs of tax law and how to handle the IRS.
