Irish Backgammon Winner Demands Refund for Massive Tax Deduction
Big time backgammon winner John P. McManus is involved in a legal tussle over a taxation that removed a huge chunk of his winnings. McManus won more than $17 million in USD from a game of backgammon and was subject to a massive tax reduction that removed more than $5 million from his winnings. McManus was disturbed even though he still had $12 million to spend. He felt that the country double taxed him when he was eligible for exemption because of his Ireland residency. McManus believed that he was a resident of Ireland even though he lived in Switzerland.
The reason that McManus thought he was an Ireland resident was that he fell under the requirement to pay a domicile levy. A domicile levy is a tax that some Irish residents must pay if they have property in the country that is worth more than €5m. Such people must have also had a liability to pay Irish income tax of less than €200,000. McManus owned property in Ireland even though he lived in Switzerland, and he had to pay the levy because of it. His argument against the tax that the country took from his winnings was that it put him in a position where he payed double taxes. Ireland has a Double Tax Avoidance Treaty in place that says that it shall be unlawful for a resident of Ireland to have to pay taxes more than once. McManus took his complaint to the legislators and requested a refund of the money that came out of his gambling winnings in the U.S. A senior judge denied his request for a refund of the taxed income. The judge determined that his argument was invalid for more than two reasons.
Although McManus felt that his payment of the domicile levy was enough to qualify him as a resident of Ireland, Judge Nancy B. Firestone did not agree with his train of thought. Judge Firestone concluded that the mere payment of the domicile tax did not automatically qualify McManus as an Ireland resident. Many people own properties in various countries and don’t actually live there. Thus, the payment of the domicile tax alone was a weak argument in the judge’s eyes. Furthemore, the domicile levy isn’t a tax that the above-mentioned treaty covers, according to judge Firestone.
McManus had a second argument that he tried to present in this situation. His second argument was that the U.S. violated the non-discrimination clause in the treaty when it taxed the gambling winnings. Judge Firestone found no merit in McManus’ second argument either. She barred the second argument because McManus did not bring it into question or mention it to the Internal Revenue Service before the initial hearing. He waited until the cross-motions and brought it up orally in a last-minute attempt to sway the judge. The judge is adamant about her desire to refuse a refund of the taxed monies. McManus will have to continue to fight the denial if he still wants the country to retract the taxes.