IRS Demands $6 Million in Simpson Case

The Internal Revenue Service is seeking more than $6.5 million from the estate of Nicole Brown Simpson, a claim based on a $12-million civil judgment owed the estate by O.J. Simpson but never paid.

Louis H. Brown--Nicole Brown Simpson’s father and the administrator of her trust, created to support her two children--said Wednesday he is appealing the IRS demand, which was made in September.

Brown said the estate petitioned the U.S. Tax Court in Washington, D.C., last week to intervene after failing to come to agreement with IRS officials. He declined to comment in detail about the dispute.

The estate’s appeal--filed Dec. 7--said the IRS demand for the money is based on a civil judgment against O.J. Simpson that “might never be collected.”

Brown said the IRS gave the estate 90 days to comply. But he added, “There’s been no money collected, and no basis for that lien. So we said, ‘IRS, you’re nuts.’ ”

The former football star hasn’t paid “one single penny” of the $12 million he was ordered to pay the estate, Brown said. A jury last year held Simpson liable for the slaying of his former wife and ordered him to pay damages. Simpson was acquitted of murder in an earlier criminal trial.

Such tax matters are confidential until they are appealed to the tax court and the amount in dispute becomes public record.

IRS spokeswoman Laurie Kellerman said the agency is seeking to collect $6,546,253 from the Brown estate, but declined to comment further.

Timothy J. Kay, the attorney for the Brown estate, had no comment. Simpson and his attorney, Leroy Taft, also did not respond to questions about payment of the civil judgment.

In all, Simpson was ordered to pay $33.5 million to the estates and heirs of Nicole Simpson and her friend Ronald Goldman, who was killed alongside her.

Nicole Simpson had about $768,000 in assets when she was fatally stabbed on the walkway outside her Brentwood townhouse in June 1994, according to the estate tax forms filed in the months after her death. Her father said Wednesday that the estate already has paid “substantial” taxes on those assets.

The IRS contends that the $12-million civil jury award should be included among the taxable assets of the estate. The agency sent the estate a “notice of deficiency,” saying it had 90 days to appeal. The tax rate on the jury award is 55%.

Estate tax specialist Pam Gray said the IRS demand is common.

A Newport Beach-based partner in the law firm of O’Melveny & Myers, Gray said the IRS is protecting its ability to levy estate taxes against any money that Simpson eventually pays. If the IRS did not make such a formal demand now, she said, it might lose the ability to do so later because of a three-year statute of limitations that kicks in when the estate is filed.

Gray also said the IRS wasn’t singling out the Brown estate because it audits every estate tax return filed with the agency.

She said if Simpson does pay some of the damages, the Brown estate probably would be able to write off any costs that it rings up in its efforts to collect the money.