Beanie Babies Creator Expected to Plead Guilty to Tax Evasion
Back in the 1990s, the Beanie Baby craze swept the world. By some estimates the popularity of the under-stuffed bean-bag animals represents the epitome of a marketing strategy based on the concept of controlling a fad and thus increasing the value of the product.
Beanie Babies creator, Ty Warner, used the strategy to such effect that he amassed a huge fortune and is now estimated by Forbes magazine to be worth somewhere in the vicinity of $2.6 billion. According to the Internal Revenue Service, however, he also hid more than $93 million in a United Bank of Switzerland account, and that has resulted in his being charged with tax evasion.
By the Department of Justice’s accounting, Warner should have paid the U.S. government more than $1.2 million in taxes in 2002 on income that was generated by funds in the Swiss bank. But he failed to report it as required under the Foreign Account Tax Compliance Act.
Federal charges were filed against Warner last week and the Justice Department says it’s expected that the 69-year-old toy mogul will plead guilty early next month. Besides a possible prison term of five years, Warner could face a fine of $250,000. He also must pay the back taxes and penalties, all of which his attorney says will lead to him paying more than $53 million.
As Washington, D.C., area readers of this blog are surely aware, the action against Warner is only one of many in which the IRS is seeking to hold Americans with offshore bank holdings accountable for income it suspects has not been properly reported. Dealing with such issues demands the attention of an experienced tax attorney.
Source:AccountingWeb.com, “Beanie Babies at the Center of Tax Scandal?,” Teresa Ambord, Sept. 23, 2013
