Robert J. Fedor, Esq., L.L.C.

Former reality star finds self in a tough "situation" with the IRS

Ohio residents were first introduced to the MTV television series Jersey Shore in 2009. Since that time, the antics of the television show's cast members on and off camera have been the subject of many news stories and legal cases.

While a cast member on the show, Mike Sorrentino, who went by his nickname the Situation, was best known for perpetuating the stereotypical image of a New Jersey Italian-American male and flashing his abs. Off camera, Sorrentino took steps to capitalize on his new-found fame by starting two companies with his brother Marc and pursuing other promotional and endorsement opportunities.

Most recently, the 32-year-old reality television star was the subject of an IRS investigation which resulted in criminal charges being filed against Sorrentino and his brother for allegedly filing false tax returns and conspiring to defraud the government.

According to court documents, Sorrentino and his brother are accused of failing to claim and pay taxes on millions of dollars they reportedly earned by making special appearances and through promotion deals. IRS investigators allege the Sorrentinos were paid cash totaling hundreds of thousands of dollars for these deals which they failed to claim as income.

In total, the IRS charges the brothers intentionally took steps to undervalue their business profits and personal incomes by roughly $9 million. The two are also accused of using business funds for their personal use. Sorrentino recently appeared in court where he entered a not guilty plea to a seven-count indictment. If convicted, both brothers could be sentenced to serve more than a decade each behind bars and forced to pay hundreds of thousands of dollars in restitution fees.

Sorrentino's reputation and personal history aside, small business owners who deal in cash must take steps to claim cash payments as income. Additionally, small business owners would be wise to ensure personal and business assets are kept and managed separately. Individuals who fail to follow this advice could face criminal charges related to tax evasion and tax fraud.

Source: The Star-Ledger, "'Jersey Shore's' Mike 'The Situation' Sorrentino pleads not guilty to federal tax evasion charges," Jeff Goldman and Thomas Zambito, Sept. 25, 2014

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