Celebrities, they’re just like us. Singer extraordinaire Beyoncé is headed to Tax Court over $2.7 million in tax penalties assessed by the Internal Revenue Service. In January, the megastar, who files her taxes separately from her equally talented billionaire husband Jay-Z, received a Notice of Deficiency, claiming she owes over $1.4 million in unpaid taxes and over $288,000 in penalties for 2019, plus another $805,000 in taxes and $161,000 in penalties for 2018.
Beyoncé is now fighting back, alleging in her petition that the IRS disallowed millions of dollars in deductions, including $868,766 in charitable contributions. She’s also contesting the assessed penalties because she “has acted reasonably and in good faith.” In addition to her petition, Beyoncé also filed a request for trial in Los Angeles. “Unlike a criminal trial where ‘innocent until proven guilty’ applies, the burden often shifts to the petitioner (the taxpayer) to prove why the IRS is wrong or mistaken,” said Cynthia D. Brittain, a partner at Karlin & Peebles LLP in Los Angeles. “Usually, both sides will present certain ‘stipulated facts’ to streamline the proceeding so the hearing can be tailored for time economy,” she added.
According to a statement received by Business Insider, Michael C. Cohen of De Castro, West, Chodorow, Mendler & Glickfeld Inc., who’s representing Beyoncé in the matter, said that they’re actively working with the IRS and the matter will be resolved shortly, indicating that a possible settlement before trial is possible.
As for whether she’ll have to pay any penalties no matter the outcome, Brittain explains, “the Internal Revenue Code, IRS rulings and case law provide the type of support that a taxpayer can show he or she relied upon to support that they acted reasonably and in good faith. Also, the taxpayer in certain instances can claim that they relied on professional advice for their position.” The Tax Court judge takes all this into consideration, so chances are if Beyoncé did indeed act in good faith and didn’t simply evade paying taxes owed, she may be spared the assessed penalties.