Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

IRS Hits a Sour Note for Some Music Stars

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

IRS Hits a Sour Note for Some Music Stars

Article excerpt

HACKENSACK, N.J. -- Success in music can be a fairy tale come true.

Only for some, it can be less like "Cinderella" than one of those stories about wishes that backfire.

Joseph Robinson Jr. and Leland Robinson of Englewood, N.J., the heirs of the Sugar Hill label, are the latest music industry heavyweights undone by their own Midas touch -- courtesy of the Internal Revenue Service. Both were sentenced Thursday in a $1.2 million failure-to-file taxes case to three years' probation apiece, a combined total of $24,000 in fines and other penalties.

Also last week, Mary J. Blige, the R&B star famous for "No More Drama" and "Be Without You," was hit with a tax lien because of the $3.4 million she owes to the government. Hip-hopper Lauryn Hill, formerly of The Fugees, was sentenced earlier this month to serve three months in federal prison for failure to file to the IRS, to the tune of $1 million (she paid up the bulk before sentencing).

It's an age-old question: Why do so many music people have so much trouble with money?

Bad advice, bad habits, lack of fairness in the music industry itself -- all have gotten the blame. "The problem is that I don't have the right people in the right places doing the right things," Ms. Blige said in a published report last May. In an open letter last month, Ms. Hill blamed "an old conflict between art and commerce. ... I've been fighting for existential and economic freedom." At his sentencing Thursday, Leland Robinson said he was "not a criminal," while being "totally remorseful ... I take full responsibility for my actions."

Perhaps the real culprit is a culture that showers riches on people too young or inexperienced to manage them, said Sirius XM radio host Ed Lover, who became well-known in hip-hop circles through his long stint as a DJ and a VJ on MTV. "When you don't come from money, you have no one to teach you about money," he said.

Take the matter of withholding taxes. In the music industry, stars usually get their money upfront and in full. If you don't know about withholding -- or you don't care about the money you'll be owing the government next year -- it's easy to fall into a "sufficient unto the day" attitude.

"In the entertainment business, they usually don't pay taxes out of your check," Lover said. "There's no withholding at all. If a record label owes you $50,000 or $60,000, you're going to get a $50,000 or $60,000 check."

Similarly, artists who are paid cash for a live performance often assume that's that -- they don't realize that the venue reports the salary to the IRS, which will demand taxes on it.

And that's just the beginning. Stars, if they're not careful, are liable to have expenses they didn't bargain for. There's the entourage of employees, personal assistants, friends, bodyguards and hangers-on, each one a paycheck. …

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