Country Music Star Pleads Guilty to Obstructing the IRS

CINCINNATI – David Allen Coe, 76, of Cincinnati, Ohio, pleaded guilty to one count of impeding and obstructing the due administration of the Internal Revenue laws.  Coe faces a maximum of three years in prison and a fine of up to $250,000.

Carter M. Stewart, United States Attorney for the Southern District of Ohio, Kathy A. Enstrom, Special Agent in Charge, Internal Revenue Service Criminal Investigation, Cincinnati Field Office announced the guilty plea entered today before U.S. District Judge Timothy S. Black.

According to court documents, David Allen Coe was a national recording artist in the country music industry. Coe performed at least 100 concerts yearly throughout the United States where he earned income, including during the 2008 through 2013 calendar years.  During this same time period, Coe either failed to file his individual income tax returns with the IRS or when Coe did file his individual income tax returns with the IRS, he failed to pay the taxes due and owing.  In addition, during this same time period, Coe also owed money to the IRS for prior years of taxes due and owing.  Instead of paying his taxes in full, Coe spent the money earned from performing concerts on other debts and gambling.

As part of his entertainer contract, when a concert was booked, Coe required that the total concert fee be deposited upfront.  The deposit was either paid by wire or by check made payable to the booking manager's account.  The booking manager took his fee out of the deposit and then wired the remaining amount directly to Coe or to Coe’s road manager's business account.

In approximately May 2009, Coe stopped receiving these payments by wire into his personal bank account after receiving correspondence from the IRS as to his current outstanding tax liabilities.  This action prevented the IRS from levying his bank account to pay his income taxes.  The remaining balance of the concert fee was to be paid in cash only, by 3:00p.m.on the day of the concert, with no $50 dollar bills allowed as Coe believed they were bad luck and would not gamble with them.  Coe’s road manager picked up the cash, which he used to pay himself and the other band members, and then provided the remaining cash to Coe either in person or through MoneyGram or Western Union.  Additionally, Coe would sometimes receive cash bonuses from playing concerts.  Coe’s arrangement to be paid primarily in cash was also in an effort to impede the ability of the IRS to collect on the taxes owed.

Despite earning income from his concerts, Coe willfully failed to pay the income taxes due and owing when he filed his 2009, 2011 and 2013 individual income tax returns.  As a result, Coe now owes the IRS $388,190.94 for the 2009 income tax year, $35,640.10 for the 2011 income tax year and $42,733.82 for the 2013 income tax year, which includes the income taxes owed plus interest and penalties.

Coe also owes restitution to the IRS for the taxes due and owing as a result of his 2008 and 2010 tax returns, which said amount will be determined at the time of sentencing.

"All taxpayers, regardless of their profession, must comply with their federal tax obligations," said Kathy A. Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.  “As is evident from Mr. Coe’s guilty plea, schemes to evade the payment of taxes are a violation of the Federal Tax laws and postpones the eventual need to comply at an even higher cost, including federal criminal prosecution and having to pay back taxes with interest and steep penalties."

This case was prosecuted by Assistant United States Attorney Jessica W. Knight and was investigated by special agents of IRS-Criminal Investigation.