Page 4 - Ty Warner Case Study

During the U.S. crackdown on offshore tax evasion his lawyers argued that
“dozens of individuals who engaged in the exact same conduct with respect to
undisclosed overseas accounts” got probation.

Warner’s evasion was the largest of more than 100 filed in the five-year
crackdown.

However, Warner applied for the voluntary disclosure program in September

2009, the IRS rejected him because it wasn’t available to those already known

to the agency.

Pleading guilty Warner then paid a civil penalty of $53 million; one of the
largest civil penalties ever levied, and filed amended tax returns for the years

1999 to 2008. He had also paid $14 million in back taxes and interest.
In mitigation Warner’s lawyers said that

“For all his sophistication with respect to the design and manufacture of
plush dolls, and the beauty and design of hotel properties, he remains a relative
novice when it comes to financial issues.”

Moreover, he had paid approximately $1 billion in taxes and had donated over
$140 million to charity and that

“There is no reason to believe prison time is necessary to prevent him
from engaging in tax evasion again.”

On 14th, January 2014 Warner was sentenced to two years’ probation and 500
hours of community service at three schools. However, the Justice Department
immediately appealed the sentence seeking a year sentence for Warner in a
federal prison.

Ty Incorporated was founded 1986 and rose to become the most successful and
profitable company in the history of the U.S. toy industry with over $1 Billion
in sales and an estimated $700 million in profit in its peak year. In the stuffed
animal trade called the "plush" trade by the toy industry, H. Ty Warner, created