Dionne Warwick Takes on the IRS

Dionne Warwick’s bankruptcy lawyers are looking to stop the IRS in its tracks.

As we’ve reported, the Internal Revenue Service recently sought bankruptcy-court approval to recover on the approximately $7 million in federal taxes that Warwick owes by going after two companies with ties to the singer, Star Girl Productions Inc. and KMBA Productions.

In an objection filed Friday, Warwick’s lawyers said Star Girl and KMBA simply handle the legal and administrative tasks associated with booking engagements for Warwick, whom her lawyers describe as a “well-known signer [sic] and performer.” The companies pay wages to Warwick, but she owns no ownership stake in them nor serves as an officer or director in them.

As a result, her lawyers said, the companies should be kept outside of the purview of her bankruptcy case as well as the reach of the IRS.

“The relief sought by the IRS is impermissible in that the IRS seeks to collect on pre-petition levies against the debtor from property in which the debtor has no interest,” Warwick’s lawyers said in court papers.

They added that except for about $25,000, most of Warwick’s tax debts should be dischargeable. And if the IRS is going to argue that Star Girl and KMBA are so closely tied to Warwick that they can be considered to be her “alter egos,” then Warwick’s lawyers the IRS should have added the companies to the motion. Her lawyers say that by not doing so, the tax agency denied the companies’ due process rights.

A New Jersey bankruptcy judge is scheduled to hear from both sides about the dispute next week, court papers show, so stay tuned.

Known for such hits as “Walk on By,” “I Say a Little Prayer,” and “Do You Know the Way to San Jose,” the Grammy award-winning singer filed for bankruptcy in March.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ.