Singer Beyoncé Squares Off with Uncle Sam over Alleged Tax Liability

Apr 29, 2023 | Blog

A tax attorney in San Jose has learned that Beyoncé has squared off with the Internal Revenue Service regarding a tax liability of $2.7 million. The singer brought the challenge to the IRS in United States Tax Court.

According to Forbes, 41-year-old Beyoncé filed a Petition for Redetermination concerning tax bills for 2018 and 2019, which together totaled almost $2.7 million. The singer received a Notice of Deficiency for those years, which included penalties and interest.

IRS Claims Beyoncé Owes Millions in Tax Penalties

The agency assessed that Beyoncé owed $805,850 more than she paid for the taxable year 2018, and more than $161,000 in interest and tax penalties due to this alleged delinquency. For the taxable year 2019, it was also determined by the IRS that $1,442,747 in additional taxes were owed, and interest and penalties for that year were assessed at more than $288,500.

The total amount the “Lemonade” hit maker is disputing comes to almost $2.7 million. Beyoncé alleged in her petition that the IRS erroneously disallowed millions of dollars of legitimate deductions, such as those for expenses, professional and legal services, management fees, insurance, utilities, depreciation, and other expenses.

For example, the IRS alleges that a charitable contribution carryover, totaling more than $868,000, should not be allowed. This amount was reported in 2018, but the pop star disputes the agency’s claim.

Beyoncé also stated that the IRS was wrong when they determined that she failed to report $1,449 in 2018 as income from royalties. The singer has the option of seeking tax audit representation, but how the petition plays out remains to be seen.

Accuracy-Related Tax Penalties Also Assessed by IRS

The petition contested IRS-assessed penalties as well, which the Bureau categorized as accuracy-related fees. The agency calculates penalties of this kind at 20 percent of the total amount of the underpaid taxes according to Internal Revenue Service Code Section 6622.

The IRS website states that “disregard of rules and regulations,” “negligence,” and “significant understatement of income tax” are the most commonly awarded tax penalties in this category.

Beyoncé Asserts No Wrongdoing

Beyoncé asserted that her 2018 royalties and deductions were all properly reported and there should be no additional tax liability on her part. She went on to say that she “acted reasonably and in good faith,” and therefore should not be given accuracy-related penalties even if the IRS determines that additional taxes are indeed owed. A tax audit attorney is often consulted in such cases.

It Was a Very Good Year

Beyoncé enjoyed a profitable year in 2018, during which time she released an album with her husband, Jay-Z, entitled, “Everything Is Love,” and afterwards, the couple began their high profile “On the Run II” stadium tour. Beyoncé was also a headliner at the 2018 Coachella Valley Music Festival.

In addition to her 2018 accomplishments, Beyoncé made a profitable agreement with Netflix in 2019 regarding her concert film “Homecoming” and released a live album by the same name.

More than one tax attorney in San Jose will likely be following the developing story and providing updates. Regardless of celebrity status, those who find themselves at odds with the IRS should seek legal help from a back-tax attorney or other qualified legal professional.