CELEBRITY TAX PROBLEM OF THE WEEK

Ja Rule Pleads Guilty to Tax Charges – Owes over $1 Million In Back Tax

Rap singer Ja Rule has admitted to failing to file tax returns for five years, causing a loss to the government of over $1.1 million.

The rapper, whose real name is Jeffrey Atkins, pleaded guilty Tuesday to three counts of failing to file tax returns with the Internal Revenue Service during a court appearance in Newark, N.J. Atkins, 35, of Saddle River, N.J., entered his guilty plea to three of the five counts of failing to file his tax returns before U.S. Magistrate Judge Patty Shwartz.

According to the charges filed against him and the statements made in Newark federal court, during the period in question, Atkins was the sole shareholder of ASJA Inc. and Rule Tours Inc. He admitted that during the five tax years from 2004 through 2008, he received music royalty income from ASJA Inc. and music tour and live performance-related income from Rule Tours Inc.

While Atkins has pleaded guilty to charges specifically related to tax years 2004, 2005 and 2006, the terms of his plea agreement state that the tax loss for all five years, including 2007 and 2008, will be taken into account at sentencing—a total loss to the government of approximately $1,137, 912.

Atkins has also agreed to file true and accurate tax returns and to pay all taxes and penalties owed to the IRS. Judge Shwartz set bail at $500,000 and permitted Atkins’ release pending sentencing, currently scheduled for June 13, 2011.