On February 22, 2024, actor Terrence Howard, noted for his numerous film and television roles since the 1990s and Oscar nomination for “Hustle and Flow”, faced a significant setback in his ongoing legal battle. A default judgement was issued, making Howard liable for substantial federal back taxes in the amount of $903,114.72, including tax, penalties, and interest.
The initial complaint against Howard was filed on December 19, 2022, but the motion for the default judgement wasn’t filed until almost a year later, on September 22, 2023. The majority of the tax bill revolves around the years 2010 and 2011, a portion significant enough to raise questions about the legal obligations of the bill due to standard IRS collection practices.
The IRS typically has a decade from the date of tax assessment to collect the amount due. Most often, income tax is assessed at the point of filing the tax return. Considering Howard’s notable tax amounts hail from 2010 and 2011, the timing and legitimacy of the bill has come under scrutiny.
Aside from the massive sum due, what truly stands out in Howard’s case is the unusual step taken by the Department of Justice (DOJ) to file a civil lawsuit to collect back taxes. Such action by the DOJ is a rare occurrence and often considered a worst-case scenario for any taxpayer owing back taxes. The taxpayer will not only be held liable for legal costs, but the chances of the IRS winning are high should the assessed tax prove to be legitimate. Moreover, a civil judgement would extend the IRS’s standard 10-year collection period. Given that judgements can be renewed, this potentially allows the IRS to keep collecting for decades to come.
Howard seems to have a long-standing history of fraught interactions with tax agencies. In 2019, Howard was under investigation for suspected criminal tax evasion, and California’s income tax agency placed a state tax lien of $144,000 against him. Furthering his financial woes, tax liens totaling almost $639,000 were filed against his property in Pennsylvania in 2005 and 2006.
An interesting development in Howard’s case arises from a voicemail left for the lead prosecutor, Maria Elizabeth Ruwe. Howard argued that it’s immoral for the United States to levy taxes on the descendants of slaves and claimed that all of the United States should, by default, belong to the descendants of slaves. However, the IRS considers such reparation arguments to be frivolous. In fact, using such arguments can result in serious legal repercussions, including civil and criminal penalties like fines and imprisonment.
Given the continued focus on his tax controversies, it is hoped that, like the fictional character he portrayed – the CEO Lucious Lyon on the TV series “Empire” – Howard will navigate these real-life legal troubles with strategic caution.
For further details of this report, please refer to the article published on Above the Law.