Beyoncé Braces for Tax Court to Contest Over $2 Million

Overhead view of a huge concert at an indoor venue with thousands of fans

by Harry Galstian

June 5, 2023

It seems that the old adage about “death and taxes” is true even when it comes to megastars.

One of the most recognizable names in the entertainment industry, Beyoncé Knowles-Carter, has found herself in hot water with the IRS. According to a Notice of Deficiency dated January 18, 2023, the world-famous performer and businesswoman owes approximately $2.7 million in taxes and penalties, which have accumulated over two years: 

  • 2018: $805,850.00 additional tax + $161,170.00 penalty
  • 2019: $1,442,747.00 additional tax + $288,549.40 penalty

And that’s not all; the above amounts have accrued interest.

Disputing the Deficiency: Queen Bey vs. the IRS

Knowles-Carter earns income through various means: her music and acting career, endorsements, business ventures, and more. The net worth of this multi-award-winning singer-songwriter, actress, entrepreneur, and philanthropist is estimated to be around $500 million. Now, almost $3 million of that value is at risk.

Of course, Knowles-Carter is contesting the matter in the U.S. Tax Court. In a 20-page petition filed on April 17, 2023, she disputed the additional taxes and penalties. One of her claims is that the IRS erroneously disallowed millions of dollars’ worth of deductions that she is entitled to, including a charitable contribution carryover of $868,766. Other expenses mentioned are insurance, legal fees, management fees, professional services, utilities, depreciation, etc.

According to Section 6622(a) of the tax code, accuracy-related penalties are calculated at 20% of the underpayment of tax. Knowles-Carter also addressed that in her petition, stating that if it is determined that tax is in fact due, the penalties should be waived because she “acted reasonably and in good faith.” Furthermore, the professional tax advice that Knowles-Carter relied on will be taken into account by the judge when determining the outcome of her case.

The pop icon has requested that the trial take place in Los Angeles, California, where she lives. Because this is a civil matter, the burden of proof will rest on the petitioner—in this case, Knowles-Carter (as an individual taxpayer)—to show that the IRS is wrong.

Next Steps for the Star

Knowles-Carter filed for the redetermination just before the deadline, as taxpayers have 90 days from the date of the Notice of Deficiency to challenge the taxes and other amounts. There is a possibility that the matter will settle out of court, before the trial takes place. Until then, we’ll be keenly following the status of this high-profile tax battle involving one of the world’s most influential entertainers.

However, Knowles-Carter isn’t the first superstar songstress to contest government claims of million-dollar tax fines. Colombian singer and songwriter Shakira has been embroiled in a tax controversy that began in 2017 with the Paradise Papers and that has culminated in an upcoming trial for six counts of tax fraud. Spanish prosecutors have accused her of failing to pay the equivalent of over $15 million; if found guilty on all counts, she might face a jail sentence of 8+ years as well as more than $25 million in fines. In 2013, another Grammy award-winning artist, Lauryn Hill, was sentenced to three months in federal prison and subsequently three months of house arrest after evading taxes on over $2 million of earnings.Though regular taxpayers may not face fines as high as those of celebrities, it still pays to have an experienced consultant on one’s side. If you have any tax-related issues or concerns, we’d be happy to help. Contact us today, and we’ll get you started with a free and confidential consultation with one of our trusted professionals.