When most people think of Martha Stewart, they think of one of two things. Either she built one of the most successful brand names in housewares and do-it-yourself crafts, or she’s a convicted felon. Because while she was never officially convicted of insider trading, according to How Stuff Works, Stewart was convicted of lying to federal investigators who were questioning her about the case. She claimed she had a deal with ImClone Systems that, if the stock ever fell below $60 per share, her holdings of the stock would automatically be sold. However, apparently no such deal actually existed, and it was quite convenient that she managed to sell off a huge amount of the company’s stock the day before it was announced that their promising anti-cancer drug had not been approved by the FDA. (The value fell from $58.30 the day she sold to $35.83 seven days later)
However, that wasn’t the only thing Stewart did that was on the shady side of the financial world. While it might seem like small potatoes compared to 18 months in jail, several years of probation, and the difficulty of rebuilding her entire brand, Stewart also had to pay over $220,000 in back property taxes.
Why Didn’t She Pay?
As we all know, you have to pay taxes on all sorts of stuff. You have to pay taxes on your income, you have to pay sales tax, and if you own property, and you have to pay property taxes, too. However, despite owning a New York home, Stewart didn’t pay $220,000 worth of taxes that she owed.
Why? Was it because she didn’t have the money? Did she forget she had that property, given that she had homes and assets in so many other places? Well, to hear Stewart tell it, she didn’t spend a lot of time at that property, so she didn’t think she should have to pay taxes on it.
It might sounds logical, but it’s important to remember something, property taxes aren’t calculated on how much you actually use a property. If you own a house that stands empty year after year, you still owe the taxes on it. It’s a yes/no scenario (do you own it?), rather than a sliding scale based on how much you use it. Hence why she had to pay all the back taxes in question.
But, it could have been worse… significantly worse. Stewart wasn’t given all the punishments she could have received, as she was able to simply pay back what she owed, and the matter was settled. No sheriff sale.
You Probably Wouldn’t Get Off That Easily
No matter how rich, famous, or powerful someone is, the government always wins in these instances. Everyone, from minimum-wage cashiers, tipped food servers and movie stars, to the heads of powerful criminal organizations must pay their taxes. If you don’t, or if you try to get out of paying what you owe, the government will find out. And when they find out, they’re going to do something about it.
Whether you own a dozen properties, or you’re content with your one, small castle, it’s important to have a plan for how you’re going to handle your tax responsibilities. You need to be proactive because the last thing you want is to wait for the government to remind of taxes you haven’t paid. Because if they have to come to you, then you’re already playing defense.
Instead, play offense and have a plan in place long before tax day comes. Whether it’s property taxes or income taxes. That way you’ll have everything in order, and you can make sure you pay what you owe… but not a penny more.