TMZ

Our TV Shows

Got a Tip?

Call TMZ at (888) 847-9869 or Click Here

Michael Jackson Estate

Targeted by IRS

Shocking Tax-Cheating Allegations

2/8/2014 9:08 AM PST BY TMZ STAFF
breaking news

0207-michael-jackson-irs

The Michael Jackson Estate is in the crosshairs of the IRS for allegedly cheating taxpayers out of a fortune ... and now the taxman wants the Estate to pay the piper -- to the tune of more than $700 million.

The allegations are stunning.  According to legal docs -- obtained by the L.A. Times -- when Michael died the executors told the IRS his net worth was around $7 million.  The IRS now says MJ's net worth was actually $1.125 BILLION

And 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 worth of taxes, and when you add the 40% it comes to more than $702 Million.

As for what the agency says was under-reported:

-- The Estate valued MJ's likeness at $2,105. The IRS says the value is actually more than $434 million.
-- The Estate valued Michael's interest in a trust that owns songs by MJ and the Beatles at ZERO!  The IRS says its more like $469 million.
-- There's another MJ trust the Estate claims is worth $2.2 mil.  The IRS says it's worth $60.6 mil.
-- The Estate valued the Jackson 5 master recordings at $11.2 mil.  The IRS says $45.5 mil.

It's pretty clear the Estate will fight this like crazy, but worst case scenario the taxes could wipe out what the Estate has made since MJ's death ... which could be devastating for Michael's kids.

We contacted a rep for the Estate who says they stand by their initial statements on the matter ... telling us, "The Estate of Michael Jackson disputes the IRS position in its entirety."

The rep adds, "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 dollars in taxes and is in full compliance with the tax laws."

297 COMMENTS

No Avatar

Previous 15 Comments | 6 | 7 | 8 | 9 | 10 | 11 | 12
166.

Meanie    

Since they're valuing it at zero, let Paul McCartney buy the music catalogue for back taxes. Put the music back in the hands of the guy who wrote the music. #TeamKarma

226 days ago
167.

Sandra     

Go IRS. Hopefully they will be made to pay up big time!! This family is so unlikeable because of their money grubbing ways and dishonesty!!

226 days ago
168.

KR    

Oh wonderful! Karma met the Jacksons! Karma wins!!!

226 days ago
169.

Chgome    

As long as there is money and a live Jackson, this will go on forever. I just hope his kids are ok.

226 days ago
170.

Sandra    

Wow, trolls on this site that have no life, what a surprise.
Well, I guess that all the liars that claimed that MJ was broke and in debt when he died were lying all along weren't they? MJ always had money. Whether this story is true or not I don't now. But either way, MJ is still making lots of money, if some money goes to the IRS there will still be much left.
MICHAEL JACKSON IS THE KING. R.I.P MICHAEL <3

226 days ago
171.

Sandra    

#TeamMichaelJackson.
I wish people could just stop bugging Michael, he's dead leave him alone. If there are taxes to pay, let the estate pay them, why make a big deal out of it. MJ is the best, the king of pop. His legacy will live forever.

226 days ago
172.

Areader    

The Estate valued Michael's interest in a trust that owns songs by MJ and the Beatles at ZERO!.........Zero!, No wonder the IRS doubled the fine!!

226 days ago
173.

Vote2012    

The IRS and NSA are our version of the Gestapo or KGB, they spy on every part of your life and use brutal force if you upset them.

226 days ago
174.

Susan62509    

Federal estate tax is calculated based on the DATE OF DEATH (2009) values for the estate. For valuation purposes, all assets under the control of the decedent at his death are considered taxable and that would include corporate interests, real estate and contracts for future earnings.

At the time of MJ’s death, he was in debt $400 to $500 million. The estate is arguing that the singer’s future earning power was actually depressed and the subsequent boon to the estate, while nice, could not have been predicted as of the date of death.

226 days ago
175.

Ryan    

Holy crap

226 days ago
Previous 15 Comments | 6 | 7 | 8 | 9 | 10 | 11 | 12

Around The Web