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Messi's tax issues are a little messy

by
Jason Feist
on
10/23/2014
Messi's tax issues are a little messy

Although the odds of the common taxpayer being accused of tax fraud are slim to none, there is a small percentage that gets caught. Remember, IRS auditors are thoroughly trained to look for tax fraud. If you are accused of fraud, it is important to hire the best tax attorney you can find. Being accused of tax fraud is a serious offense and can be avoided by honest reporting and/or having a great tax professional look at your statements before filing. 

July 2014 was not a winning year for soccer superstar Lionel Messi; who, ranked fourth on Forbes' list of 100 paid athletes, is stated to be worth 50 million dollars a year. Messi was accused of defrauding Spain of $4 million euros. In June, soccer star's prosecutor in June tried having the charges against him dropped, but failed; his primary argument was that Messi's father...' that Messi's father took full ownership of his son's financial matters. 

It has been alleged that Messi created a fictitious corporate structure to avoid paying taxes on income from his image rights from 2006–2009. If convicted, both Messi and his father could face up to 6 years in prison and approximately 32 million dollars in fines. The allegations state that Messi's “corporate structure”relied on hiding the names of real owners of companies registered in the UK, Switzerland, Uruguay and Belize.

FATCA, also known as the Foreign Account Tax Compliance Act, is America's global tax law. It requires foreign banks to reveal American accounts holding more than $50,000. It has been reported that Messi paid $10–15 million last year into his taxes and is expected to pay more. Statistically, most people cheat on their taxes by underreporting their income, which is most commonly done by self-employed business owners. 

Fraud vs. Negligence: Auditors are trained to sniff out fraud, but try to give the common taxpayer the benefit of the doubt. The line between fraud and an honest mistake is very thin, but such a mistake can cause a 20% penalty to your tax bill. If convicted of tax fraud, a heavy 75% civil penalty is given plus, depending on the crime, jail time. Some red flags of tax fraud include using a false social security number, keeping 2 sets of financial books, or claiming a blind spouse as a dependent when you are single.

Although the odds of the common taxpayer being accused of tax fraud are slim to none, there is a small percentage that gets caught. Remember, IRS auditors are thoroughly trained to look for tax fraud. If you are accused of fraud, it is important to hire the best tax attorney you can find. Being accused of tax fraud is a serious offense and can be avoided by honest reporting and/or having a great tax professional look at your statements before filing.

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Jason Feist

Jason Feist

Jason Feist hails from Ohio and graduated with honors from the University of Cincinnati where he holds a bachelor's degree in accounting. He has a combined 15 years of financial and accounting experience and for the last 7 years he has been the Managing Partner of Empowered Insights - a pioneer in the accounting industry. The mission of Empowered Insights is to be one of the leading firms enriching peoples lives and growing businesses. They specialize in tax preparation, business accounting and consulting.

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