In the 1990s, people across the country lined up for hours to purchase Beanie Babies. High demand for the stuffed animals caused them to become instantly collectible. Since that time, however, interest in the product has diminished, and the toy’s creator, H. Ty Warner, has seen this reflected in his company’s income.
After Beanie Babies reached their height of popularity, Warner was cited by the Internal Revenue Service for failure to report a significant amount of foreign income for tax year 2002. According to the agency, the man didn’t report at least $3.1 million worth of taxable foreign income in his filing.
Not only did Warner fail to list his income on tax forms, he also apparently made strident efforts to conceal the existence of his European accounts. In recent years, the IRS has been very aggressive about going after individuals suspected of hiding income in offshore accounts, and Warner’s case is an example of these efforts.
Most recently, Warner disclosed that he will plead guilty to tax evasion charges and pay more than $53 million in back taxes and penalties. Warner made an effort to work with tax officials in 2009 with a voluntary disclosure program, but those efforts were unsuccessful. Now, the man could face time behind bars, in addition to the financial penalties.
No one wants to be accused of failing to pay taxes. However, as the IRS continues efforts to punish those with tax debts, this could become a reality for Minneapolis residents or business owners. If this situation arises, even after honest mistakes are made, it may be possible to work out a deal to resolve the situation.
Source: NPR, “Beanie Babies Creator To Pay $53 Million For Tax Evasion,” Scott Neuman, Sept. 18, 2013