Aretha Franklin estate reaches deal with IRS to pay off claimed $7.8 million tax debt

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Brian McCollum, Detroit Free Press
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Three handwritten wills have been found in the suburban Detroit home of Aretha Franklin, months after the death of the “Queen of Soul." Aretha Franklin is seen her performing during the closing of the 25th annual Ford Detroit International Jazz Festival on Monday, September 06, 2004 at Hart Plaza in downtown Detroit.
Three handwritten wills have been found in the suburban Detroit home of Aretha Franklin, months after the death of the “Queen of Soul." Aretha Franklin is seen her performing during the closing of the 25th annual Ford Detroit International Jazz Festival on Monday, September 06, 2004 at Hart Plaza in downtown Detroit.

When Aretha Franklin died in 2018, a powerful creditor came calling: the Internal Revenue Service.

The IRS claimed the singer’s estate owed more than $7.8 million in unpaid income taxes, interest and penalties, piled up from 2010 to 2017. Even while other thorny dramas in the Queen of Soul’s ongoing probate battle played out, sometimes pitting family against family, the IRS remained the mightiest hammer hanging overhead.

Now, in a major breakthrough, Franklin’s four sons and the IRS have reached an agreement that would speed up payment of the remaining tax burden — while giving the sons an injection of money from their late mother’s fortune.

At the moment, the heirs receive no money from the estate because of the IRS situation.

In a petition filed Feb. 19 in Oakland County Probate Court, the estate said the proposed arrangement includes an immediate $800,000 payment to the IRS, though the estate continues to dispute the overall balance owed.

Since Franklin’s death, the estate has been steadily paying on the tax debt — and its ever-accruing interest — while formally appealing the agency’s claimed total. As of December, the balance on the IRS books stood at $4.75 million.

The new filing says the final IRS bill will be determined “by agreement or litigation.”

Meanwhile, the deal between the estate and the IRS maps out how posthumous Aretha Franklin revenue will be allocated until the tax debt is settled. Backdated to Jan. 1 of this year, it includes new income from song royalties, licensing agreements and other money streams.

The deal calls for 45% of quarterly revenue to go toward the existing IRS balance.

Another 40% would be directed to an escrow account to handle future taxes on the newly generated income.

The remaining 15% of revenue would be used for managing the estate.

The agreement also sets up immediate $50,000 payments to each of Franklin’s four sons — Clarence, Edward, Teddy and Kecalf — and clears the way for other quarterly cash payouts to them.

Kecalf Franklin, youngest son of Aretha Franklin, attends the probate hearing for his mother's estate concerning a found written will at Oakland County courthouse in Pontiac, Mich. on Tuesday, Aug. 6, 2019.
Kecalf Franklin, youngest son of Aretha Franklin, attends the probate hearing for his mother's estate concerning a found written will at Oakland County courthouse in Pontiac, Mich. on Tuesday, Aug. 6, 2019.

The proposed deal, authorized by 10 attorneys representing the sons, was submitted to the court by attorney Reginald Turner. The Detroit lawyer and incoming American Bar Association president was appointed last year as temporary personal representative of the Franklin estate.

The proposed order must be approved by Judge Jennifer Callaghan to take effect.

Franklin died in August 2018 after a long battle with pancreatic tumors. The Detroit star’s estate proceedings have unfolded as her life and career continue to loom large via high-profile music celebrations, commercial TV placements and film projects, including MGM’s “Respect” biopic with Jennifer Hudson (August) and National Geographic’s eight-part “Genius” series (March 21).

Contact Detroit Free Press music writer Brian McCollum: 313-223-4450 or bmccollum@freepress.com.

This article originally appeared on Detroit Free Press: Aretha Franklin estate reaches IRS deal to pay off claimed tax debt