Beyoncé fights IRS over $3M tax bill, disputes deductions & challenges penalties
The petition filed by Beyoncé to contest the IRS claims puts forward the argument that the agency made errors in disallowing substantial deductions.
Beyoncé has filed a petition challenging a $3 million tax deficiency imposed by the Internal Revenue Service (IRS) for alleged underpayment on her 2018 and 2019 tax returns. The dispute includes additional taxes and penalties claimed by the IRS, totaling significant sums.
The petition filed by Beyoncé to contest the IRS claims puts forward the argument that the agency made errors in disallowing substantial deductions, notably disputing the disqualification of a charitable contribution carryover from 2018.
Tax court trial postponed
The trial, originally scheduled for May in Tax Court to address the matter, has now been postponed. "This case is stricken from the trial session. Jurisdiction is retained by the undersigned. The parties shall file a status report or proposed stipulated decision by 07/05/24," noted the documents signed by Judge Maurice B. Foley.
The IRS said that Beyoncé owed an additional $805,000 in taxes and $161,000 in penalties for the tax year 2018. For the subsequent year, 2019, the IRS claimed additional taxes of $1.4 million along with $288,000 in penalties. Interest will continue to accrue on these amounts until the debt is fully settled, as outlined in the petition filed by Beyoncé last April.
New tax reporting requirements for third-party payments
Moreover, a new tax reporting requirement has come into effect, impacting individuals receiving income exceeding $600 from settlement organisations like Venmo or Ticketmaster. This change, implemented under the American Rescue Plan Act, removes the previous threshold of over $20,000 in earnings and 200 transactions annually, now obliging anyone with income above $600 to report it to the IRS.
The IRS anticipates a substantial increase in the issuance of 1099-K forms due to this regulatory alteration, with an estimated 44 million forms expected for the 2023 tax year. Efforts to raise the reporting threshold back to $20,000 through legislative measures are underway in Congress, although progress on this front remains pending.
