Davidson estate sues Deloitte Tax over $2.7B IRS bill
The estate of billionaire and former Detroit Pistons owner Bill Davidson is suing an international company’s tax firm over a recommended plan lawyers claim led to an Internal Revenue Service bill that topped $2.7 billion.
According to the lawsuit filed Thursday in New York state’s Supreme Court, Deloitte Tax LLP created “a reckless and grossly negligent estate and tax plan” for Davidson, who died in 2009 at age 86.
Spurred by a “strong desire” to secure him as one of its “marquee clients,” the firm failed “to disclose the numerous material risks” involved as well as “created an Estate Plan replete with flawed structures and inherent defects,” the suit claims.
“Mr. Davidson was a multibillionaire, prominent professional sports team owner, and philanthropist,” the filing read. “Deloitte Tax viewed Mr. Davidson as a client who could both generate large fees, and serve as a prominent showpiece that Deloitte Tax could use to promote its tax services to other high net worth individuals.”
Deloitte Tax also allegedly told Davidson and his representatives that under its plan he would “win if he lived, or win if he died.”
In a statement Thursday night, Deloitte Tax said: “We ... stand fully behind the services our team provided to Mr. Davidson. We regret that the estate executor has decided to pursue this path. We are prepared to defend ourselves vigorously and are confident we will prevail in this matter.”
In May 2013, the IRS levied a tax bill on his estate that totaled more than $2.7 billion, the lawsuit stated. Davidson’s estate went to court to dispute the amount owed; after negotiation, it was obligated to pay more than $457 million in taxes, penalties and interest, the court document read.
“This amount was in addition to the over $168 million in estate tax and $82 million in gift tax already paid under the assumption that this was the total tax due,” attorneys wrote in the suit.
Estate representatives are seeking to recover about $500 million in additional estate and gift taxes, related fees, penalties, plus interest, the document stated.
Davidson, of Bloomfield Hills, was chairman, president and CEO of Guardian Industries. Headquartered in Auburn Hills, it is one of the world’s largest producers of float glass and fabricated glass products used in the automotive industry.
Becoming majority owner of the NBA Pistons in 1974, Davidson went on to launch a sports empire that also once included the WNBA’s Detroit Shock, NHL’s Tampa Bay Lightning, IHL’s Detroit Vipers, and the Detroit Fury arena football team.
Under his ownership, the Pistons and Shock each won three championships. In 2003-04, the Shock, Pistons and Lightning all won league titles, making Davidson the first owner to hold three pro championships concurrently.
In 2008, Forbes reported Davidson’s net worth was $4.5 billion, making him the richest man in the state.
Davidson also was a world-renowned philanthropist who gave heavily to Jewish and Israeli causes. Attorneys wrote in the lawsuit he was “responsible for more than $200 million in donations to local and international charities and universities.”
The Pistons-Palace Foundation, a charity he founded, has donated more than $20 million for youth leadership, athletics and entertainment, the filing said.