Dancing with the IRS: Dancing with Stars champ gets indicted
byOct 3rd 2008 11:00AM
Castroneves makes his home in South Florida, and the indictment happened in Miami on Thursday. The IRS says he failed to report $5.5 million in income between 1999 and 2002. His sister Kati is his manager, and she was indicted too, along with his lawyer, Alan Miller.
The charges against Castroneves include one fraud charge and six charges of tax evasion. Each of those counts could get him up to five years in prison, for a total of 35 years. (But maybe he'll get lucky like Wesley Snipes and find himself acquitted of some of these charges.)
The IRS is alleging that Castroneves used a several companies to move money around and ultimately avoid reporting his earnings as taxable income. Included in this plan was a company called Seven Promotions, a Swiss bank account, a licensing company in The Netherlands, and a Brazilian sponsor.
Penske Racing allegedly paid Castroneves $1 million a year for three years, and paid a company called Seven Promotions an additional $5 million. Penske was then asked to stop paying Seven and send the money instead to Fintage Licensing. A "deferred royalty plan" was used to avoid reporting the income as taxable. It is also alleged that Castroneves and his sister lied to the IRS about Seven Promotions in a civil case from 2004.
I really feel no pity for Castroneves or anyone else invovled in this situation. The tax code is complex and has plenty of legitimate loopholes that taxpayers can use to reduce their taxable income. Anything beyond that is just plain fraud, and amounts to people not paying their fair share. I don't like paying income taxes either, but I still report my income honestly and pay what I owe. It's time that everyone else do the same, celebrity or not.