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London - Michael Jackson's estate is being pursued for $702 million in taxes.
The Internal Revenue Service (IRS) accused the late 'Thriller' hitmaker's executors of significantly undervaluing assets following the singer's death in 2009, and has launched a legal battle in a bid to secure $505 million and an additional $197 million in penalties.
In US Tax Court documents in Washington, obtained by the Los Angeles Times newspaper, the agency claims the estate inaccurately placed the star's net worth at slightly more than $7 million when Michael died after an overdose of a surgical-grade anesthetic, and argue he was actually worth $1.125 billion.
The IRS said that the estate's original tax return was so inaccurate that it qualified for a gross valuation misstatement penalty, which would allow the government to double the usual 20 per cent penalty for underpayment.
Most of the dispute centres on the value of Jackson's image and likeness, which the estate placed at just $2,105 and the IRS believes should have been $434.26 million.
The agency also valued the star's interest in a trust that includes the rights to some of his biggest hits and most of the Beatles catalogue, including 'Yesterday,' 'Sgt. Pepper's Lonely Hearts Club Band' and 'Get Back,' at $469 million but the estate gave it zero value.
The IRS also believes Jackson's interest in another trust was worth $60.6 million, not $2.2 million, as the estate claimed.
If the court rules in the IRS' favour, the estate could be forced to sell some of its assets or strike a deal to pay back the money over 15 years. - Bang Showbiz