The government of the United States refused to back down on its stance that John McManus was not a resident of Ireland when he won close to $20 million from gambling in the United States, even though the businessman held an Irish passport.
The 64-year-old investor, racehorse owner and gambler filed a complaint in September at the U.S. Court of Federal Claims, in which he claimed the U.S. government “wrongfully withheld” $5.22 million to cover the taxes of his $17.4 million gambling winnings.
McManus—one of Ireland’s richest—won the money playing “either backgammon or poker” in 2012, but the payer sent $5.22 million to the Internal Revenue Service as withholding. This prompted the businessman to file a non-resident U.S. federal income tax return, citing a 1997 double-tax treaty between the U.S. and Ireland.
Income from gambling is taxable in the United States, but McManus’s lawyers said the man was a resident of Ireland in 2012, and under the country’s provincial tax structure, whatever income he earned outside the country is not subjected to tax. Instead, McManus has to pay a flat tax of €200,000 under the domicile levy.
The Department of Justice, however, had other ideas. Late last year, attorneys for the U.S. government rejected McManus’s claims that he was a “resident of Ireland” for tax purposes in 2012, The Irish Times reported.
In their response to McManus’s complaint, government prosecutors argued the businessman didn’t file an Irish income tax return for that tax year and that he took the position that he was not a resident of Ireland in 2012.
The U.S. government believes McManus “is taking a contrary position in the U.S. dispute, so he is stopped from making the argument in the U.S. courts,” according to the report.
The lawyers admitted McManus held an Irish passport in 2012, and that it was effective until November 2013, but they couldn’t say whether the man was an Irish citizen when he filed his legal action in August last year, the news outlet reported.
Forbes reported in 2014 that the IRS had already approved McManus’s refund claim, but it was remanded to another department for review.
The $5.22 million tax refund is probably a blip in McManus’s bank account. In 2014, the businessman ranked 12th at the Irish Sunday Times Rich list, with an estimated fortune of £550 million. McManus’s earned a considerable portion of his money by raising studs in Limerick and Newmarket, and also through his investments with John Magnier and Dermot Desmond.