Michael Jackson estate's dispute with the IRS explored as King of Pop's family cut off from accessing trust fund

As per court documents obtained by People magazine, on Thursday, May 30, Michael Jackson's family has been cut off from receiving money from his trust fund, as long as the year-long dispute with the IRS persists. The outlet revealed that Jackson's children Price, Paris, and Bigi are beneficiaries of his trust, while his mother Katherine is the only beneficiary of his sub-trust fund.

According to a tax audit, the estate owes about "$700 million in taxes and penalties." People magazine obtained a filing which was done on May 2, according to which the executors decided to cut off access to the fund for the family.

While the issue began after the tax audit claimed that the King of Pop's estate owed a lot in taxes, in 2021, the estate won a battle against the IRS, in which it claimed that findings were not right.

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Dispute between King of Pop Michael Jackson's estate and the IRS explored

Amid the long-going dispute between Michael Jackson and the IRS, a new development has taken place recently. According to that, the Jackson family including the King of Pop's mother and kids can't access his trust fund as long as the estate's dispute with the IRS doesn't get settled.

According to the audit report, the estate has "undervalued its assets." In 2021, however, the judge gave a decision in favor of the estate which claimed that the findings of the IRS were disputed. According to the then ruling made by Judge Mark Holmes, at the time of Michael Jackson's death back in 2009, his assets were worth $111 million. The Internal Revenue Service, however, estimated that the amount was $482 million.

Judge Holmes then said,

"We have to look for the value of each of Jackson’s assets. The value we put on them as of the day he died is, we acknowledge, much less than their value much later under the estate’s management."

The judge further stated that the tax court assumed that at the time of death, Jackson had to spend a lot of money as legal fees after he was accused of child molestation, which eventually led to the reduction in his assets. After the decision was made, the executors for the estate said,

"While we disagree with some portions of the decision, we believe it clearly exposes how unreasonable the IRS valuation was and provides a path forward to finally resolve this case in a fair and just manner."

The issue began sometime around 2013, when a tax bill of about $700 million was produced after the IRS did the audit at the time. The decision ended the age-old conflict between the estate and the IRS. Another issue came up after that when the estate filed a motion for reconsideration of the value of Mijac. No final decision has been taken regarding this issue, as of now. That would mean that the final value of the estate is yet to be calculated.

Michael Jackson's children with his sister La Toya Jackson (Photo by Tasos Katopodis/Getty Images)

With the ongoing battle, the attorneys for the estate had urged that a portion of the trust be distributed amongst Jackson's family members. The request, however, was not accepted since according to the executors it was difficult to "possibly determine what amount could be safely distributed at this time."

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Michael Jackson's mother and son are also in the middle of a legal battle

While discussing Michael Jackson's music catalog Mijac, it is worth noting that recently Sony Music acquired a huge stake in the catalog. While Mijac's total value is estimated to be $1.2 billion, Sony already acquired a minimum of $600 million worth of stake, as reported by Billboard.

Talking about Jackson's children, his oldest, Prince, was born in 1997. Michael Jackson had Prince with his former wife Debbie Rowe. The former couple had another child, Paris, in 1998, before getting divorced a year later in 1999. The King of Pop then got full custody of his children. His third child, Bigi was born through surrogacy in 2002.

Amid the issue between the IRS and the Jackson estate, another conflict related to the family has also taken place. The battle is between Michael Jackson's mother Katherine and his youngest child Bigi. Katherine claimed that her legal bills should be paid from the Jackson fund, which, Bigi didn't approve of. He believed that Katherine's case against the executors was not a strong one, and that the value of the estate should not depreciate with massive legal fees.

People magazine then reported that Katherine has objected to Sony Music acquiring a major part of Mijac. The executors, however, claimed that the transaction was made "keeping in mind the best interest of the estate and its beneficiaries."

It was also revealed then that Katherine was also against the release of the documentary Michael Jackson's This Is It in 2009, which became a massive success.