Renowned musician and entertainment icon Beyonce Knowles is taking the Internal Revenue Service (IRS) to court to contest a tax liability of almost $2.7 million for the 2018 and 2019 fiscal years.
In a Notice of Deficiency dated Ja. 18, 2023, the IRS assessed that Beyonce owed an additional $805,850.00 in taxes and $161,170 in penalties for the 2018 fiscal year.
The bureau also determined that $1,442,747.00 in additional taxes and $288,549.40 in penalties were due for the 2019 year. The IRS charged interest for both years.
Beyonce, who is at the helm of Ivy Park, a highly sought-after activewear brand, is contesting the IRS’s decision to disallow millions of dollars in deductions for insurance, management fees, legal and professional services, utilities, taxes, depreciation, and other expenses. She argues that any additional tax liability owed should not be subject to accuracy-related penalties since she “acted reasonably and in good faith.”
The singer’s petition also disputed the disallowance of $3,581 in Qualified Business Income Deductions reported in 2018 and $14 reported in 2019.
She also contests the disallowance of $868,766 in charitable contribution carryover reported in 2018, as well as the IRS’s finding that she failed to report $1,449 in royalty income in 2018.
Beyonce maintains that she properly reported her income and deductions and that the penalties assessed by the IRS are inaccurate.
The case is yet to be heard, and it is unclear when it will be resolved.
The move by Beyonce comes after her activewear brand, Ivy Park, severed ties with German sportswear brand, Adidas, due to creative differences.
The end of Beyonce’s partnership with Adidas marks the conclusion of a productive collaboration that began in 2018, during which they worked together to revive the Ivy Park activewear line and develop new footwear and apparel for the brand.
Adidas suffered a $10-million loss in 2022 due to its collaboration with Ivy Park.
The revenue decline not only disappointed financial experts but also cast a shadow over Adidas’s position as a leading activewear brand.
