August 25, 2013 14:53

US tax office says Michael Jackson's estate owes $702million

The IRS has claimed the estate has undervalued Jackson's assets

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Michael Jackson's estate owes $702million in federal taxes and penalties, according to the IRS.

The US tax-collecting agency claims that Jackson's administrators undervalued some of the star's assets by hundreds of millions of dollars. The estate previously challenged an IRS claim on the King of Pop's fortune in July, reports Reuters.

The tax return in question is the 2009 filling, which was due on the day Michael Jackson died. The filling said that Jackson's total estate was worth $7million in taxable value. The IRS challenged this and, in May of this year (2013), issued the estate a tax deficiency notice for $505.1 million in taxes and $196.9 million in penalties.

According to court documents, Jackson's image and likeness was valued by his estate at $2,105, while the IRS said its taxable value was $434million. Jackson's recording assets, valued at $469million by the IRS, were not valued in the singer's 2009 filling.

A spokesman for Jackson's estate said the IRS' valuations "were based on speculative and erroneous assumptions unsupported by the facts or law". He also revealed that the estate has paid over $100million in taxes.

The Jackson estate will not have to pay the $702million in back taxes and penalties unless the US Tax Court rules in favour of the IRS.

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