Earlier this week, Forbes — who initially dubbed Kylie the "world's youngest self-made billionaire" largely due to her cosmetics line — alleged the reality TV star "likely forged" tax documents and inflated the value of Kylie Cosmetics to land the Forbes cover.
"Kylie's business is significantly smaller, and less profitable, than the family has spent years leading the cosmetics industry and media outlets, including Forbes, to believe," the mag said.
Kylie blasted the report, but The Sun claims she and her mother are scrambling.
"Kris and Kylie are freaking out and fear that this is going to hurt their brand, and even worse, they could be in trouble with the government," the source said.
Forbes' claim was damning, insisting the Kardashians went to "unusual" lengths to prove just how wealthy Kylie was, which included "inviting Forbes into their mansions and CPA's offices, and even creating tax returns that were likely forged."
The mag now claims Kylie is not a billionaire and has a net worth just under $900 million.
On Friday, Kylie's lawyer demanded a retraction.
"We have reviewed Forbes' article accusing Kylie of engaging in deceit and a 'web of lies' to inflate her net worth," a statement read. "The article is filled with outright lies. Forbes' accusation that Kylie and her accountants 'forged tax returns' is unequivocally false and we are demanding that Forbes immediately and publicly retract that and other statements."