Travolta's Unlucky Tax Numbers

In compromise deal, actor pays Internal Revenue Service $600,000 in back taxes

By Bridget Byrne Nov 29, 2000 10:00 PMTags
It was a face off between John Travolta and the IRS over unpaid taxes, and the feds got the better of the match.

The Get Shorty star has acknowledged he short-changed the government and agreed to pay $607,400 in back taxes, but no penalties, according to a settlement filed in U.S. Tax Court in Alexandria, Virginia.

That's about half the $1.1 million in back taxes and penalties the IRS had claimed Travolta owed for 1993-1995.

Of course, the actor can afford it. He's been pocketing around $20 million per movie since Pulp Fiction revived his career in 1994. (Then again, after appearing in hits like Get Shorty and Face/Off, considering recent duds Battlefield Earth and Lucky Numbers maybe Travolta needs all the cash he can get.)

Travolta has reportedly being trying to dodge the taxman for more than five years, according to the Los Angeles Times, which obtained a copy of the two-page tax settlement.

The actor got into trouble when he tried to lower his tax bill by claiming $2.27 million in unspecified losses over three years in a company called ATLO.

The Times reports ATLO is a so-called S corporation, a set-up wealthy people often use to gain tax breaks.

Although the exact improprieties weren't ennumerated, the IRS disputed Travolta's claim, saying in court documents that the actor's income in 1993 and 1994 should have been $2.2 million and as much as $4.7 million in 1995. Records also show that the IRS was unhappy about Travolta claiming an additional $50,000 in unspecified deductions in 1994 and 1995.

Under the compromise agreement Travolta has agreed to settle his back taxes by paying $150,547 for 1993, $248,096 for 1994 and $208,757 for 1995.

High-profile disputes are usually settled quietly and early, but this one became public because last year Travolta filed an appeal in Tax Court.

IRS officials, Travolta's tax lawyer, James M.A. Murphy and a publicity spokesperson for the star would not comment on the settlement.