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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."

301 COMMENTS

No Avatar
61.

Mal    

The guy was a habitual child molesterer....why would something like this shock anyone. All our kids are safer with him dead.

68 days ago
62.

Coupe09    

I knew these numbers were low when I read them years after his death. Yes he was in debt but there are still millions of dollars left. SMH pay up estate. DAYUM! Sucks for you that money gone now. Lol!

68 days ago
63.

shutupgirl    

Can TMZ report about the "oriental woman" stalking Amanda Bynes at the gym? Twitter.com/PersianLa27 - I knew the recovery process was too fast & too soon for this loony toon.

68 days ago
64.

Hahaha    

No wonder Katherine was after AEG. She knew this was coming. Good riddance!

68 days ago
65.

Lee    

ohh noooooo!!!

68 days ago
66.

Carol L    

Go get em. Mama Jackson shows signs of greed!!

68 days ago
67.

Marcus    

Hmmm... this is gonna be in litigation for years... The estate better start siphoning the cash they have on hand to the Cayman Islands...

68 days ago
68.

Jamey Hunter    

Why am I not surprised? Also, I cold give a flying fig if MJ's kids get any money. Let them make their own money.

68 days ago
69.

CremeBrulee    

The Jackson family accountant is Jermaine.

68 days ago
70.

daved0622    

This will be the first time I am rooting for the IRS. F the Jackson family/estate.

68 days ago
71.

She's baaaack    

Come one, come all! Jump aboard the MJ Money Train once again! Come little boys, come vulture family, come handlers ... come aboard everyone, there's plenty of money to go around!!

68 days ago
72.

Lori    

Why would anything related to Michael Jackson be considered shocking? That family could not tell the truth if their lives depended on it.

68 days ago
73.

anonymous    

Who knows what will happen here. That's a lot a lettuce.

68 days ago
74.

LIberty101    

Wait a second. There is no such thing as "cheating taxpayers" It is Michael Jackson's and his estates money. The people have no moral right to collectively use threats of violence and then actual violence (thrown into a cell against your will) to steal another person's property. The real criminals are the people, using collective force to steal money that isn't theirs.

68 days ago
75.

Joe Blow    

I didn't know MJ was a conservative!

68 days ago
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