Legendary rapper Nas is certainly in good company, but for all the wrong reasons. He’s joined a list of celebrities, such as Ron Isley and Wesley Snipes, who have skipped payments to Uncle Sam.
According to TheYBF.com, the rap titan owes the Internal Revenue service (IRS) a grand total of $6.46 million in past due taxes. The financial downfall began in October of 2009 in New York when the IRS filed a $2,584,236 lien against his Eagles Landing property in Georgia and then filed a second lien in the amount of $3,365,671 during February of 2010. Finally, earlier this month the IRS filed a third lien with the New York City Register of Deeds for $514,298.
This isn’t surprising news to Horace Madison, co-founder of Madison Financial Group, a business management firm which has overseen the finances of clients such as Lil Wayne and Young Money, Usher, OutKast and newly signed Interscope recording artist Reema Major. Horace believes there are several reasons why Nas and other celebrities find themselves victims of poor financial oversight.
“These artists trust and rely on the people they pay to make sure they are in compliance with the tax laws without paying attention themselves,” he said.
The most important element that celebrities need to pay attention to is the difference between gross income (before taxes) and net income (after taxes) since their payments are distributed in large sums and taxes aren’t usually withheld. Not paying attention to the difference between gross and net incomes usually results in frivolous spending to support their addictive lifestyles.
“They live off of the gross instead of the net income. So we show them the gross amount, what they owe in taxes, commission and then what is left that they can spend. But they have a certain lifestyle they want to live and can live at least for a short period of time. So it’s so hard for them to break those habits,” Horace said.
To help Nas and others break bad financial habits, Horace recommends a three-step approach which includes liquidation, budgeting and getting a sound financial education.
1. Pay taxes upon earning and live off of net income
2. Establish a budget that supports a realistic lifestyle
3. Be actively involved in your financial situation, review statements and financial reports, etc.
Not only can Nas benefit from heeding Horace’s advice but so can a few other celebrities as evidenced in our slideshow. Click through to see who else is in desperate need of financial advice.