Final Notice

Slow Jamz, Faster Levies

• Jason Carr, Esq. • Episode 14

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 13:47

Carl Mitchell of Crete, Illinois, known professionally as Twista, pleaded guilty on June 24, 2026, to five counts tied to willfully failing to pay income tax for 2019 through 2023. 

Court records and statements made in court indicate Mitchell earned income from performances, album sales, streaming, and royalties, and that both the IRS and Mitchell’s accountants repeatedly informed him of his tax debts and obligation to pay. Rather than paying the taxes owed, the government said Mitchell entered into third-party royalty advance agreements knowing the IRS could not levy those funds and made large lifestyle purchases, including at least four luxury vehicles.

Jason explains the line between civil tax debt and criminal exposure, how IRS-CI proves willful failure to pay, why accountant and IRS warnings matter, and what taxpayers with irregular income should do before the IRS problem becomes a DOJ problem.

Key Takeaways

  • Tax debt is often a civil collection problem. Warnings, luxury spending, and collection avoidance can change the case. The IRS can follow creative income streams, including performances, streaming, royalties, licensing, and advances.
  • Accountant warnings can become powerful willfulness evidence.
  • Royalty advances and other financing tools can be legitimate, but the purpose matters when IRS collection is active.
  •  Taxpayers with irregular income should set aside tax reserves and make estimated payments.
  • If the facts include possible intent evidence, privilege should be structured before casual explanations are given. 

Resources Mentioned

Disclaimer 

This video is for informational and educational purposes only and does not constitute legal or tax advice. Viewing this video does not create an attorney-client relationship between you and The Law Office of Jason Carr, PLLC. The discussion is based on publicly available information and is not a complete analysis of any person’s legal rights, defenses, tax obligations, or case facts. Any commentary about what a taxpayer, business owner, or advisor “should have done” is general educational discussion only and may not apply to your situation. If you have a specific legal or tax question, consult a qualified attorney or tax professional licensed in your jurisdiction.

Comment Policy

Please do not post confidential, sensitive, or personally identifiable tax information in the comments. We do not provide individualized legal or tax advice in the comments or social media replies.

SPEAKER_01

You're listening to Final Notice. Real Tax Cases Exposed with Jason Carr. Each week we break down real Department of Justice tax fraud prosecutions and reveal what should have been done to avoid them. And now here's your host, Jason Carr.

SPEAKER_00

Five years of unpaid income taxes, more than $440,000 owed, four luxury vehicles, and a royalty advanced structure that put future music money outside the IRS's reach. Today's case is about Carl Mitchell of Creed, Illinois. You probably know him by a different name, Twista. On June 24, 2026, Mitchell stood in federal court and pled guilty to five counts tied to willfully failing to pay income tax for 2019 through 2023. Sentencing is set for October 22nd, 2026. Each count carries up to one year in prison. This case is built around a basic tax problem that became something much more serious. Income came in, taxes went unpaid, warnings piled up, and the government says that future royalty money was handled in a way that kept it beyond levy reach. Court records and statements made in court indicate Mitchell earned income from performances, album sales, streaming, and royalties. That is the modern music business in one sentence. Concert money, streaming money, catalog money, royalty money, advance money. It's also a tax compliance headache if nobody is managing the cash. The government says both the IRS and Mitchell's accountants repeatedly told him about his existing tax debts and his obligation to pay them. That matters because criminal tax cases are usually built around knowledge and choice. The records do not simply show a balance due, they show warnings, and warnings change the case. Court records indicate Mitchell had unpaid tax liabilities dating back to 2011 and that he failed to pay more than $440,000 in taxes owed. From 2019 through 2023, he had music income coming in. The problem, according to the government, was what happened after the IRS and his accountants told him he needed to pay. Instead of paying the tax, Mitchell entered into agreements with a third-party company to receive advances on future royalties, knowing the IRS would not be able to levy those funds. That is the investigative center of this episode. A royalty advance can be perfectly legitimate. Artists, writers, musicians, and other creators use advances all the time. You give up part of future income stream and receive money now. That can be financing, that can be business planning. But when IRS collection is active, the purpose matters. If the taxpayer has been warned and the structure is used because the IRS cannot levy the money, the same document takes on a very different meaning. A financing document becomes intent evidence. The government also pointed to large lifestyle purchases. According to IRSCI, Mitchell bought at least four luxury vehicles while failing to pay the taxes owed. The Chicago Sun Times reported details from the plea agreement: about $100,000 for a Corvette, about $80,000 for a BMW I-8, $65,000 for a Tesla, and roughly $65,000 for a Jeep. That is the part everyone understands. If someone says, I could not pay the IRS, the government asks, Could you pay the dealership? That question does not require a tax lawyer. It lands with everyone. So what made this criminal? The tax bill alone didn't do it. People owe the IRS every day. Contractors fall behind, business owners underpay estimates, artists have uneven income. Consultants get paid in burst. Families have bad years. The civil IRS system exists because tax debt happens. The line gets crossed when the facts start showing a willful decision not to pay. Court records and statements made in court indicate Mitchell was repeatedly told by both the IRS and his accountants that he owed taxes and had an obligation to pay. The government also said he entered into royalty advance agreements, knowing the IRS could not levy those funds. And that's the difference here. A tax debt is a balance, a warning is knowledge, a luxury purchase is evidence of priorities, a payment structure designed around levy risk is evident of intent, and that's how a collection case becomes a criminal tax case. This case is a good example of how IRSCI built a case without needing a dramatic raid scene. The evidence is ordinary. That is what makes it dangerous. First, the IRS has its own collection theory. Notices, balances, account transcripts, collection actions, and payment records show what a taxpayer owed and when the taxpayer knew about it. Second, the accountants matter. The government said Mitchell's own accountants repeatedly told him about the tax debts and his obligation to pay. In a criminal tax case, an accountant warning can become one of the most important facts. Third, there's the income trail. Performances, album sales, streaming, and royalties all leave records, booking records, royalty statements, 1099s, distribution reports, bank deposits, licensing agreements, catalog statements. Music income may feel creative, but the paperwork is not. Fourth, the royalty advance agreements. Those documents would show timing, parties, payment terms, assigned rights, and how the future royalty stream was handled. And then fifth, we have the vehicles, titles, purchase agreements, wires, loan documents, insurance records, bank statements. The IRS does not need to guess about someone's spending. It's subpoena's records. Then the DOJ can tell a very simple story. The taxpayer knew about the tax debt, had income, chose other payments, and used royalty advances in a way that kept money from the IRS collection department. That's a clean government theme, and clean themes are dangerous. The one document that mattered here was likely the Royalty Advance Agreement. We do not have the agreement itself in the public materials I reviewed, so I'm not going to pretend we have the exact wording, but we know why it mattered. The government said Mitchell entered into agreements with a third-party company to receive advance on his future royalties, knowing the IRS would not be able to levy those funds. That document can answer the questions investigators care about. Who paid the money? When was it paid? What royalty stream was assigned? What did Mitchell know about IRS collection at the time? Was this ordinary financing, or was the timing tied to avoiding levy? The same contract can look harmless in one file and very different in another context. And context is everything. The tax rule behind this case is simple. Under 26 USC Section 7203, a person required to pay tax, file a return, keep records, or provide information who willfully fails to do so can be guilty of a misdemeanor. For a standard violation, the statute provides for a fine up to one year in prison or both. The IRS Criminal Investigation Manual describes the basic elements as a legal duty, failure to fulfill that duty, and willfulness. That last word is key in this case, willfulness. The Supreme Court in Cheek versus United States described willfulness in criminal tax cases as a voluntary intentional violation of a known legal duty. That is why the government focuses on warnings. That is why the vehicles matter. That is why the royalty advance structure matters. The law does not criminalize being broke. It criminalizes the willful failure to meet a known tax duty. There is an old criminal tax case that helps explain the broader principle. In Spies v. United States, the Supreme Court drew a line between passive failure to pay or file and felony tax evasion. The court said felony evasion requires something more than willful omissions that make up misdemeanor tax offenses, such as keeping double books, making false entries, destroying records, concealing assets, covering up sources of income, or handling affairs in a way likely to mislead or conceal. Mitchell pled to failure to pay counts, not felony tax evasion, so do not overread this. But SPISE explains why facts about concealment and collection avoidance matter so much in tax cases. The government wants more than a balanced due. It wants conduct. In this episode, the conduct was not a shoebox of cash or a fake invoice. It was royalty advance agreements, warnings, unpaid tax liabilities, and luxury spending. Different facts, but the same pattern. The tax bill starts the story. The choices after the tax bill are what investigators care about. At this point, there were two paths. Path one was boring and survivable. Confirm the tax balances, get the transcripts, identify the tax years, determine whether the returns were filed correctly, get current on estimated taxes, stop creating new debt, then work the collection case. That could mean a payment plan. The IRS says individual taxpayers may qualify online for long-term installment agreements if they owe $50,000 or less in combined tax, penalties, and interest, and for a short-term plan if they owe less than $100,000. If full payment is unrealistic, there's an offering compromise that may be worth evaluating. With an OIC, you can settle tax debt for less than the full amount owed when the taxpayer cannot pay the full liability, or doing so would create financial hardship, and the IRS considers ability to pay income, expenses, and asset equities and making that decision. Path two was a path that creates exhibits, keep spending, ignore the warnings, move future income into a structure the IRS cannot levy. That second path gives the DOJ a clean theme. He knew he had income, he paid for lifestyle, and he structured around collection. Once that theme exists, the tax lawyer's job gets much harder. If Mitchell had come to me before this became a criminal case, the first thing I would have said is stop making the facts worse. No new royalty advance designed around IRS collection. No luxury purchases while taxes are unpaid. No ignoring your accountants. No casual explanations over email. No talking to the IRS without a plan. The first step would be to pull IRS transcripts and reconstruct the account. What years are involved? What was assessed? What was filed? What notices were sent? Were liens filed? Was levy action pending? How much is tax, how much is penalty, and how much is interest? Second, we would build a current compliance system. For an artist, that means treating irregular income as predictable tax risk. Every performance payment, every royalty payment, every streaming distribution, every licensing payment, every advance. A percentage should be set aside before the money gets spent. If the taxpayer is self-employed, estimated tax payments need to be calendared and made. If there are entities, the books need to match the contracts and payments. Third, we would choose a collection strategy. If the taxpayer can full pay, that's what we do. If not, an installment agreement, currently not collectible status, or an offering compromise may be on the table depending on the financials. Fourth, we would be careful about privilege. Now I don't do criminal defense work. My role is helping taxpayers resolve IRS problems and keep those problems in the civil lane whenever possible. But when the facts include IRS warnings, accountant warnings, unpaid liabilities, luxury purchases, and possible levy avoidance, you need a careful privilege structure before people start explaining themselves. That means the tax attorney quarterbacks the factory view. The accountant helps where needed, the business manager provides documents, but the taxpayer does not casually narrate intent to everyone in the circle. That is how preventable problems become discoverable problems. And fifth, make the tax system boring. Creative income does not mean creative tax compliance. Use a tax reserve account, reconcile royalty statements, track 1099s, make estimated payments, keep clean books, pay the IRS before buying that car. The IRS does not accept the album cycle was weird as a payment plan. The lesson in this case is direct. Tax debt can usually be managed. Warnings are different. Luxury spending is different. Moving income so the IRS cannot levy it is different. If you owe the IRS engage the system early, confirm the balance, get current, pick a collection strategy, and preserve privilege if the facts are serious. You want the IRS problem solved while it's still an IRS problem. You do not want it becoming a DOJ problem. I'm Jason Carr, Tax Attorney. If you want to make sure you never end up on this podcast, you know where to find me. Cartaxlaw.com. Links in the show notes. This has been Final Notice, Real Tax Cases Exposed.

SPEAKER_01

If you enjoyed today's episode, share it with a friend or colleague who needs to hear it. Subscribe so you never miss a case. For show notes and more, visit cartaxlaw.com. This podcast is legal education and commentary, not legal advice. And listening does not create an attorney climate relationship. Full disclaimer at cartaxlaw.com