The Estate lied about singer’s net worth after his 2009 death, IRS claims

Feb 9, 2014 10:13 GMT  ·  By
Michael Jackson Estate grossly underestimated singer’s worth, cheated the IRS, IRS claims
   Michael Jackson Estate grossly underestimated singer’s worth, cheated the IRS, IRS claims

The taxman is coming for the Michael Jackson estate: IRS has filed documents claiming that the Estate lied about Michael Jackson’s net worth in its estimate following the singer’s 2009 death, thus cheating its way out of taxes worth a jaw-dropping $702 million (€515.1 million).

The IRS wants the Estate to pay all that money back and it’s already taken the first steps towards making sure that happens, TMZ reports. The Los Angeles Times confirms that papers against the Estate have been filed.

The way the Estate cheated its way out of paying taxes is by underestimating Michael’s net worth, the IRS claims. In its estimate of the singer’s worth, the Estate claimed it was of a mere $7 million (€5.13 million) when he died, when, in fact, it was of $1.125 billion (€825.5 million).

“In a highly unusual move, the IRS claimed executors so grossly misled the agency, it doubled the tax penalty – from 20 - 40%. So the IRS claims the Estate didn't pay $505 million [€370.5 million] worth of taxes, and when you add the 40% it comes to more than $702 Million [€515.1 million],” TMZ reports.

The same media outlet has exact figures for what the IRS claims was undervalued by the Estate, including Michael Jackson’s likeness (which it valued at a mere $2,105 / €1,544 though worth considerably more), Michael’s interest in a trust owning the Beatles and Michael Jackson catalog (which the Estate said was zero), another Michael Jackson trust fund, and the Jackson 5 master recordings.

Despite the shocking allegations, the Estate says it “disputes the IRS position in its entirety” and plans to fight the IRS to the bitter end to prove there was no cheating on its part.

“The Estate used independent, nationally-recognized and highly-qualified expert appraisers in determining the value of the Estate’s assets. By contrast, the IRS consultant’s values are not based on standard appraisal methodology, but rather are speculative and erroneous assumptions unsupported by the facts or law. The Estate has paid over $100 Million [€73.3 million] dollars in taxes and is in full compliance with the tax laws,” an attorney for the Estate says.

Useless to say, if the IRS wins the case and the Estate turns out to have lied, it will probably lose all the money it made since Michael’s death in 2009. Those most affected by this will be the singer’s three children.