Sunday 23 October 2016

McManus battles US over tax on €15.8m gambling winnings

Published 03/11/2015 | 02:30

JP McManus: high stakes
JP McManus: high stakes

Billionaire JP McManus sought to pay just €200,000 in tax on gambling earnings of €15.8m.

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The disclosure was made in filings to a US court, where the horse owner and philanthropist is seeking the refund of $5.2m (€4.7m) in taxes taken from his winnings by the US government.

Authorities there claim the tax liability arose after Mr McManus had gambling winnings of $17.4m (€15.8m) in the US in 2012.

Mr McManus won the money from a businessman, identified in court papers as Alec E Gores.

The precise nature of the high-stakes gambling involved has not been disclosed.

However, Mr Gores kept back $5.2m to cover any potential US federal income tax liability.

Limerick-born McManus claims the cash was "erroneously withheld" and that he does not owe the US taxman anything as he has already paid tax in Ireland.

This has been disputed by the US Department of Justice and the row now looks set to play out over the coming months in the United States Court of Federal Claims in Washington DC.

A Texan law firm representing Mr McManus has argued that due to a double-taxation treaty between Ireland and the US, Mr McManus cannot be liable for taxes in the US when he has already paid them in Ireland. They state that the former bookmaker had already paid a "domicile levy" to the Revenue Commissioners.

This is a flat tax of €200,000 charged to a person whose permanent home is in Ireland, their worldwide income exceeds €1m and they hold Irish property worth at least €5m.

Mr McManus's lawyers have argued that due to a double- taxation convention between Ireland and the US, he cannot be hit with a separate tax bill in the US.

In a submission to the court, they said a claim for a refund of the $5.2m was approved by the US Internal Revenue Service in August of last year.

However, the following month an additional review took place and the money was not released to Mr McManus.

Jason Bergmann, a lawyer for the US Department of Justice, said Mr McManus had not filed an income tax return in Ireland for the 2012 tax year.

He said the US government was denying Mr McManus's claim that he was resident in Ireland for Irish tax purposes in 2012.

Mr McManus, who is ranked Ireland's ninth-richest person in the 'Sunday Independent' Rich List, with a fortune of just over €1bn, frequently moves between his family home in Martinstown, Co Limerick and Switzerland, where he gambles on currency fluctuations and financial derivatives.

His charity, the JP McManus Foundation, has donated €56m to worthy causes in the past 13 years.

Irish Independent

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