Michael Jackson's estate is under fire amidst tax evasion allegations.
Michael Jackson’s estate has been targeted by the Internal Revenue Service for alleged tax evasion.
The L.A. Times reports that the IRS has informed Jackson’s estate that it owes $505 million in taxes and an additional $197 million in penalties, for a total of more than $702 million.
According to documents filed with the U.S. Tax Court, at the time of Jackson’s death his estate placed his net worth at slightly more than $7 million.
The IRS’s evaluation is vastly different, placing his net worth at $1.125 billion.
The IRS says that his return was so inaccurate that it qualified for a gross valuation misstatement penalty, which allows the government to double the 20% penalty for underpayment.
Still, the bulk of the dispute lies in alleged discrepancies over the value of Jackson’s image.
A deceased celebrity’s image and likeness, used on things like t-shirts and commercials can garner a significant amount of income.
Jackson’s estate placed his likeness at $2,105 while the IRS puts it at $434.264 million.
The differences between these figures as well as several others are significant, however Jackson’s estate is standing by their original claim.
Andrew Katzenstein, an estate tax expert in Los Angeles said, “Although most inheritance tax disputes are settled before trial, the Jackson estate appears to be taking a hard line, having hired the top tax litigators in Los Angeles.”
Katzenstein elaborated on what will happen if Jackson’s estate is found guilty of the allegations, “If it is found liable for the taxes, the Jackson estate could pay them off by selling assets or asking the IRS if it could pay over 15 years.”
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