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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."

297 COMMENTS

No Avatar
106.

Nslay    

Why do we need to know this??? Please let him rest in peace.

164 days ago
107.

jenlolo    

Good for the kids... At least they don't have the money to buy drugs ... With 5million each they are good for live unless they are spoil rotten brats

164 days ago
108.

Ralphellison187    

The IRS wants to own his likeness and generate money in perpetuity.

164 days ago
109.

Vivian    

Michaels estate makes hundreds of millions of dollars every year...guaranteed. Most people have zero clue how much money these celebrities make while they're alive...let alone deceased. His likeness becomes MORE VALUABLE because there will never be new images of him...he's dead. Michael is right up there with Marilyn and Elvis. His music sales alone are HUGE. This is not your typical one time payment to the IRS that most estates have to pay. His estate will earn revenue and grow if it's managed properly. I'm shocked if these are truly the numbers that were submitted. Looks like Katherine needed the cash for the first few years and counted on the IRS to circle back around eventually. Maybe they bought back the rights to some of his music...paid some huge debts...who knows. Seems like a weird strategy but I can't fathom any reputable tax accountant coming up with these numbers. And thinking they would get away with it. These numbers are laughable. His photos on t-shirts in Japan probably earn several hundred-thousand a year. SMH.

164 days ago
110.

Gsharon 710    

They probably just put money back into the estate that they stole earlier. According to the family, those people had been fired. How can they have the last will signed on the day Michael was away? They are happy people call the Jacksons greedy while their family will live like royalty for generations, courtesy of the great MJJ.

164 days ago
111.

j    

So in a parallel universe... Mj never liked little boys did not have that Pepsi accident and get hooked on pain killers had a loving supporting family, came out found a partner and rocked those fifty concert dates... unfortunately like his life... fantasy land. He was in freefall and his worth at the time seems exaggerated by the feds and low by the estate. 700 mil lot of negotiation room.

164 days ago
112.

Janice Simmons    

I can't believe you people slamming the Jackson's over the IRS wanting more of a piece of the pie that they had not one damn thing to do with making. I'm pretty sure none of you must have anything or you'd understand that the government will suck you dry just because you have the audacity to breathe.

164 days ago
113.

Dot    

Guess someone will have to work for the kids until they can work for themselves and pay their own way. Join the crowd. It is what life is all about. The IRS deserves to be paid. If all the little taxpayers pay their taxes, those with millions and billions should for sure.

164 days ago
114.

Rickirs    

Very clearly the "professional" appraisals done for the Estate are useless and designed to result in little or no estate tax. IRS uses internal valuation specialisist to do a risk analysis on accuracy of claimed values, then contracts with outside experts with experience in specific specialties for litigation purposes. Final values should be somewhere within 30% of the IRS valuation. The Estate appraisers personally may also be subject to appraiser penalties equal to 125% of their fees.

164 days ago
115.

youssef90    

king of pop

164 days ago
116.

CMC    

I didn't know the Jacksons were republicans...

164 days ago
117.

MACKTHEKNIFE    

IT CERTAI NLY WIL BE DEVASTING FOR THOSE POOR IIDS HAVING TO GET BY ON THE 50 MILLION DOLLARS A YEAR HIS ESTATE GENERATES..

164 days ago
118.

MACKTHEKNIFE    

oh no...IT CERTAI NLY WIL BE DEVASTING FOR THOSE POOR KIDS HAVING TO GET BY ON THE 50 MILLION DOLLARS A YEAR HIS ESTATE GENERATES..WHAT WILL THEY DO???????

164 days ago
119.

Patrick70    

Who's going to jail for fraud? Coverup? Misrepresenting? Lying? illegal statements?

164 days ago
120.

Meanie    

OMG, LMFAO!!!!!!!!!!! The mooches are going to get it up the ass by the IRS. Karma baby, Karma!

164 days ago
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