The artwork in question is Van Gogh's "The View of the Asylum and Chapel at Saint Remy," painted in 1889, reports Celebrity Justice.
Although she acquired the painting 31 years ago at a Sotheby's auction, it's now being alleged in the lawsuit Taylor is not the rightful owner, the report said.
Descendants of a Jewish woman who fled the Nazis say the painting was looted from their relatives and have demanded either its return or a share of its proceeds.
Under law, if the court rules against Taylor, the painting would be returned to the true owner.
New York attorney Howard Spiegler, who specializes in stolen art, says the burden of proof rests with those trying to recover the art.
Taylor, who converted to Judaism, says she sympathizes with other family heirs who lost art to the Nazis, but she says that doesn't apply in her case.
Celebrity Justice quoted Taylor as saying in a statement: "When it was brought to my attention that there may have been some questions as to the rightful owner of this Van Gogh, I instructed my attorneys that a thorough investigation be made.
"I have not been presented with any information that suggests that the painting was ever in Nazi possession," the statement said.
Reindeer recovered after escaping from Santa during lighting ceremony
N.J. man wakes up from 10-hour sleep with knife in back