Disclaimer: The following is for informational purposes only. It is not intended to constitute legal advice, or to recommend a course of action, and does not create an attorney-client relationship between the reader and Renuka Somers, or Somers Tax Law, PLLC.

Britney Spears has taken her dispute with the Internal Revenue Service to the U.S. Tax Court, challenging adjustments made by the IRS which resulted in approximately $721,000 in additional tax, penalties, and interest.  The case, Spears v. Commissioner, Docket No. 16465-25, is in its early stages. While no decision has been issued yet, the case is progressing through the Tax Court’s standard pretrial process, with recent filings indicating what is at stake.

The dispute stems from an IRS examination of Spears’s 2021 federal income tax return for which the IRS issued a notice of deficiency asserting that Spears owed the additional income tax, accuracy-related penalties, and interest, for:

1. Additional “flow-through” income from an S Corporation, Shiloh Standing Inc., owned by Spears, through which entertainment-related activities were conducted. Because S corporations are pass-through entities under U.S. tax law, any changes to the corporation’s income or deductions flow directly to the shareholder’s individual return. The IRS disallowed a substantial amount of business expense deductions claimed by the S corporation for 2021, result in Spears’s share of pass-through income increasing, and in turn, increasing her individual income tax liability.
2. Disallowed  “Profit or Loss From Business” attributable to LLCs which owned trademarks and IP rights in her music and perfume business, and real estate.
3. Disallowed itemized deductions for medical and dental expenses which the IRS determined did not qualify under relevant Internal Revenue Code rules.
4. Accuracy-Related Penalties under IRC § 6662(a) of 20% of the underpayment of income taxes.

Spears challenged the IRS findings, the substantive basis for the penalties, and IRS compliance with statutory requirements for supervisory approval of penalties (IRC § 6751(b)), in her petition filed on December 18, 2025.

The IRS filed its answer on January 30, 2026, denying that it had erred, and maintained that the asserted tax deficiencies and penalties were accurate. Procedurally, the IRS answer is significant – it requires Spears to substantiate her claims before an Appeals Officer to attempt to settle the case, moving the case into the pretrial phase of Tax Court litigation.

Why this case matters: Although celebrity tax cases attract our attention because of the taxpayer involved, Spears v. Commissioner raises issues familiar to many high-income taxpayers and closely held businesses: the IRS’s scrutiny of pass-through entity deductions, the substantiation of itemized deductions, and the procedural requirements for IRS penalties.

In its January 30 Answer, the IRS has demonstrated its intent to defend its adjustments, setting the stage for what may become a closely watched Tax Court dispute in 2026.

Renuka Somers.