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Tax evasion – involving nonpayment or underpayment of tax obligations – can result in jail time for a select few negligent taxpayers.
Recently, the IRS has come under fire for failing to analyze wealthy taxpayers’ returns.
Experts have told FOX Business that voluntary compliance may decline as the IRS conducts fewer audits.
The IRS audited 0.59 percent of individual tax returns, or about 892,000 returns in fiscal 2018 – fewer than the year prior when audits were at their lowest level since 2002. Rates for high-income earners (with adjusted gross income exceeding $10 million) fell to 6.66 percent, from more than 14 percent the year prior. That is the lowest level since at least 2008, when the tax agency began reporting the data.
There was also a drop in audits for people with incomes between $1 million and $5 million, as well as $100,000 and $200,000.
Nevertheless, some of the rich and famous have found their way into the IRS’ crosshairs. Here’s a look at some who ended up in prison:
Mike “The Situation” Sorrentino
Mike Sorrentino, also known as “The Situation,” who rose to fame on the reality television series “Jersey Shore,” was sentenced to eight months in prison last year for tax evasion.
He pleaded guilty to one count of tax evasion in January 2018.
Sorrentino and his brother were accused of filing falsified tax returns on nearly $9 million.
Sorrentino was released from prison in September.
In addition to jail time, he will also be required to serve hundreds of hours of community service, two years of supervised release and a $10,000 fine.
His brother also was sentenced to jail time.
Actor Wesley Snipes – known for starring in “Blade” and “White Men Can’t Jump” – served a three-year sentence after he was convicted on tax charges in 2010.
Snipes was accused of failing to file tax returns from 1999 to 2001, which is what a jury ultimately convicted him of.
Snipes was released from jail in April 2013.
Hotel queen Leona Helmsley was sentenced to four years in prison in 1992 after she was convicted of evading $1.7 million in taxes.
She was also required to pay $8 million in taxes, plus interest and penalties and serve 750 hours of community service.
Helmsley was quoted as saying “We don’t pay taxes. Only the little people pay taxes.”
Rapper Ja Rule was sentenced to 28 months in prison in 2011 after he failed to file tax returns for five years.
Had he filed returns between 2004 and 2008, he would have had to pay $1.137 million in taxes.
He only pleaded guilty to charges for the first three years.
Former baseball star Darryl Strawberry pleaded guilty to a single count of tax evasion in 1995 after he was indicted on three counts of evasion and conspiracy.
Strawberry admitted to cheating the government out of $100,000 by failing to report more than $350,000 in income.
He was sentenced to three months of prison and three months of home confinement.
In another markets-related case, homemaking guru Martha Stewart was given a minimum sentence in 2004 for lying about a stock sale.
She was sentenced to five months in prison and five months of home confinement
Stewart was accused of conspiring to hide conditions surrounding her decision to sell nearly 4,000 shares of biotech company ImClone, which generated about $227,000 in profit. She is believed to have done it after a friend (ImClone CEO Sam Waksal) dumped all his shares – before the FDA rejected one of the company’s drugs.