Collector Sues IRS for $40 Million in Art Taxes

Barbara B. Allbritton has sued the United States Internal Revenue Service with hopes of recouping $40.6 million in taxes she and her family paid following the death of her husband, millionaire media mogul and banker Joe L. Allbritton. 

After her husband’s death, a “notice of deficiency” was delivered to Mrs. Allbritton in 2013 related to what the IRS termed “taxable dividends” and distributions of art and antiques from Mr. Allbritton’s private holding company, Perpetual Corp.  While Mrs. Allbritton says she paid the full $40.6 million tax bill, she did so under protest.  The lawsuit is intended to initiate a refund of that sum from the IRS. 

Between 2005 and 2008, 33 works of art were said to have been distributed to Mr. Allbritton.  This included pieces by Paul Cezanne, Pablo Picasso and Claude Monet.  However, the widow contends that the ownership of the artworks never transferred from Perpetual Corp. to her late husband.  The complaint states, “There is not a single bill of sale, sales slip, invoice, purchase agreement, ownership transfer document, or anything else reflecting a sale or transfer of the art from Perpetual to Joe L. Allbritton in 2005.”

The IRS says they have not had the opportunity to fully review the case and, “We will consider our options and respond as appropriate with the court.”

See Alexander Forbes, Collector Sues IRS For $40 Million in Art Taxes Paid on Work by Monet, Picasso, Gauguin and More, Artnet News, Feb. 4, 2015.

Special thanks to Susan Gary (Professor of Law, University of Oregon School of Law) for bringing this article to my attention.