Dionne Warwick declares bankruptcy to escape IRS liens
Couldn't her psychic friends have warned her?
Dionne Warwick, 72, who filed for bankruptcy March 21, claiming she only has $25,000 in assets and owes more than $10 million in taxes to the IRS and the State of California, wound up buried in debt due to bad advice she was given by a "business manager/accountant," in the 1990s, according to her bankruptcy attorney, Daniel Stolz.
"Ultimately, the IRS came in and disallowed [deductions she had claimed], and said, 'Oh by the way, we're going to audit you,'" said Stolz, who declined to name the manager. He said Warwick paid the IRS more than $1 million in back taxes, but the agency opted to apply it only to her interest and penalties, which increased her debt.
During the decades of dispute, one IRS agent handling the case died and the IRS lost Warwick's file, complicating her case and increasing her costs, Stolz said.
"Since 1966, income tax liabilities more than three years old can be discharged in bankruptcy," so bankruptcy offered a logical escape, Stolz explained.
Warwick, the cousin of deceased star Whitney Houston, is famous for hits such "Do You Know the Way to San Jose" and "Raindrops Keep Falling on My Head," is living in a $5,000 a month rental house in Orange, N.J., and owns no homes, according to her attorney.
It's true she employs an assistant for $4,000 a month, but "she is living within her means on a SAG/AFTRA pension and only performs three or four times a month. When she does, people expect Dionne to be ready and prepared. It's not like she's living extravagantly: She's not," Stolz said.
"The IRS is prohibited by law from discussing any tax payer's situation," said agency spokes woman Diane Besunder.
Stolz described Warwick's bankruptcy as a tragedy.
"Dionne's a very warm, wonderful, giving person. She's been extraordinarily philanthropic throughout her life. Not only has she not accumulated great wealth, but she is now living hounded by the IRS."