11 Dec Ty Warner – How the Beanie Babies Creator’s Tax Bill Ballooned to $5.5 Million
Continuing our monthly series on celebrity tax troubles, we thought we’d cover the fantastic story of the Beanie Babies creator Ty Warner and his tax issues with the IRS.
Let’s take a look at how he managed to get a massive tax bill and probation to boot! Before we go into it, let’s take a quick look at Ty Warner’s life story:
Ty Warner’s Story
Ty Warner is a billionaire businessman, toy manufacturer, and former actor. He founded and still entirely owns Ty Inc., a company that produces and sells children’s toys, including the famous Beanie Babies stuffed toy line.
This billionaire with a net worth of $2.4 billion also owns the Four Seasons Hotel in New York. He bought it in the 90s with the money earned from his Beanie Babies line, which is also his most famous and most prized business venture.
However, we would argue that he is also famous for his major tax evasion story. If you don’t know it already, we’ll explain it now, so you can judge for yourself if he should be famous for it or not!
Ty Warner’s Tax Evasion Predicament
The story for the public began in 2014 when Warner was sentenced to two years of probation and 500 hours of community service for his tax evasion. He also had to pay a fine of $100,000. Additionally, as he pleaded guilty, he also had to pay $53 million as a civil penalty and around $27 million in back taxes.
Some would say that he got off easy because he was also facing a jail sentence. The maximum sentence suggested was five years in prison and a $250,000 fine.
He got off easier as the judge took into consideration Ty’s extensive philanthropic work. The judge stated: “Society will be best served to allow (Warner) to continue his good works.” However, there was more to it, as well.
The case unveiled that he had a secret offshore account in Switzerland. The account had a total of $107 million at one point, and he had had it since 1996. First, it was with the Swiss multinational bank UBS Group AG, and then it was with Zurcher Kantonalbank.
Additionally, it’s important to say that Warner attempted to take advantage of a specific IRS amnesty that was offered to others because of a 2008-2010 tax scandal with UBS, but, alas, the government refused to accept his plea. However, he managed to get off easier, as we’ve mentioned, due to the Olenicoff Defense his lawyers employed. The defense was based on the case of Igor Olenicoff, a real estate tycoon, who was also sentenced for tax evasion through an offshore account, but he didn’t receive a jail sentence. What’s more, Olenicoff had an even bigger offshore account containing $240 million.
When you consider all of that, what do you think? Did Ty Warner get off easy, or should he have served jail time as well?
Let us know below, and contact Golden Tax Relief if you have your own IRS problems at the moment. Our expert team of tax resolution specialists will help you find a solution that will also benefit you in the end and not only the IRS!