Tuesday, August 02, 2005
Copyright © Las Vegas Review-Journal

IRS alleges Wayne Newton owes $1.8 million

Wayne Newton Entertainer's lawyer says government owes Newton money

WASHINGTON -- The Midnight Idol and the tax man are at it again.

Las Vegas performing legend Wayne Newton, who suffered through a bankruptcy and tax debt in the 1990s, now owes the Internal Revenue Service more than $1.8 million in taxes and penalties, according to court filings in Washington, D.C.

The IRS says Newton and his wife owe for, among other things, failing to report the sale of an Arabian horse and wrongfully claiming losses on antique car sales.

The IRS said Newton failed to report all income and took improper deductions from 1997 through 2000. The federal agency outlined its claims in an April 13 notice of deficiency that prompted Newton to file a 32-page response July 6 in Tax Court in Washington.

Lavar Taylor, one of the entertainer's tax lawyers, disputed that Newton owes the government. If anything, Taylor said Monday, "We believe the IRS owes him money."

Taylor declined to say how much the IRS owes Newton or why. The government has 60 days to file an answer to Newton's response.

"That's when we will find out who the government attorney is and we're hoping they are realistic," Taylor said.

Taylor declined to comment on Newton's reactions to the IRS claims. Newton's publicist could not be reached after hours for comment Monday.

This is not the first time Newton has had to deal with the IRS regarding a tax dispute. In 1992 he filed for Chapter 11 bankruptcy to reorganize an estimated $20 million in debts, including a $341,000 Internal Revenue Service lien for back taxes.

The IRS claims in its April filing that Newton and his wife owe:

• $104,965 in taxes and $20,993 in penalties for 1997.

• $576,874 in taxes and $115,374.80 in penalties for 1998.

• $324,658 in taxes and $64,931.60 in penalties for 1999.

• $512,065 in taxes and $86,342.40 in penalties for 2000.

Among its claims, the IRS charges Newton failed to report $200,000 he received for the sale of an Arabian horse in 2000.

Newton also should not have claimed a $51,950 loss the same year on the sale of two antique cars, the agency said.

The IRS also claims the entertainer and his wife, Katherine, did not report dividends received from Newton's company, Erin Miel Inc., in 1999 and 2000. The agency said the dividends totaled $396,113 in 1999 and $536,532 in 2000.

"The payments were made for the personal benefit of yourself and your family, so they are taxable as gross receipts," the IRS document said.

The IRS alleged Newton wrongfully listed personal and family expenses as business costs -- $90,899 in 1997 and $143,881 in 1998.

For the four years ending in 2000, Newton listed automobile and truck expenses totaling $67,344. The IRS disallowed the entire amount, claiming Newton did not establish the costs as "ordinary and necessary" business expenses.

Newton listed interest expenses of $750,411 for the four years ending in 2000. The IRS claims the total should have been $75,034.

Meals and entertainment expenses of $6,416 Newton listed in 1999 were disallowed because of inadequate records.

The agency also said Newton overstated expenses for salaries, wages and payroll taxes for security guards and maids at his residence.

Newton is currently scheduled to perform a series of shows at the Las Vegas Hilton from mid- to late August.

Review-Journal staff writer Glenn Puit contributed to this report.