The creator of the popular stuffed animal toy Beanie Babies is facing sentencing after he entered a guilty plea on tax evasion charges last year. Ty Warner, found of Ty Inc., says that he took bad advice from Swiss bankers who have since been found criminally liable for their actions in helping Americans set up secret offshore bank accounts.

Prosecutors accused him of owing $16 million in income taxes that he had not paid on money earned overseas. He pled guilty and paid back the tax debt along with hefty fines last year after the charges were initially filed against him. Now he faces up to five years in prison as well, but Mr. Warner and his attorneys argue that there are many factors at play that should allow the judge to sentence him to probation only.

Among them is the fact that Mr. Warner apparently attempted to take advantage of an amnesty program offered by the IRS to bring overseas account holders back into the U.S. tax system without criminal penalty for a limited time. Mr. Warner said that he did not qualify for the protection despite his good faith effort to make the situation right. Along with that he offered evidence that he has donated significantly to various charitable causes.

This case shows how a few bad decisions or mistakes can quickly escalate into a serious matter with the IRS and shows the important of resolving these disputes early rather than allowing the situation to worsen, risking jail time along with fines. 

Source: Chicago Tribune, “Ty Warner details ‘unhappy childhood in plea for probation on tax evasion,” Becky Yerak, Jan. 2 2014.