A federal judge in the United States has rejected Irish horseracing figure JP McManus’s bid to recover the $5.22 million that he claimed the U.S. government withheld as tax from his backgammon winnings.
Last Friday, U.S. Court of Federal Claims Judge Nancy Firestone denied the Irish businessman’s request to order the Internal Revenue Service (IRS) to hand over the money that his fellow player, Israeli-born investor Alec Gores, withheld and paid the tax agency to cover potential income tax liabilities, according to the Irish Times.
The story went like this: McManus won the money in 2012, but he claimed that Gores mistakenly sent $5.22 million to the IRS as withholding. So the businessman filed a non-resident U.S. federal income tax return, in which he emphasized that he is entitled to a refund because of a tax treaty between the U.S. and Ireland.
Fast forward to 2014, when Forbes reported that the IRS had already approved the Irish man’s refund claim in August 2013. But the claim was remanded to another department for review, and then silence. So with the IRS failing to act on the claim, McManus resorted to a lawsuit.
The reasons for Judge Firestone’s decision are not publicly available as her judgment was sealed by the court after being entered, but a redacted judgment will be published soon, according to the news outlet.
McManus’s lawyer Terry Giles said he plans to talk with the Irish businessman on whether to appeal the decision.
“Obviously it is a delicate issue and everything needs to be reviewed. We have a while . . . before we have to appeal. Everything will be taken into consideration,” said Giles, according to the report.
McManus had claimed that he was an Irish resident in 2012 and thus only responsible for paying a flat tax of €200,000. U.S. attorneys confirmed that McManus was a tax resident of Switzerland in 2012, but they pointed out that he avoided paying Irish income tax “by spending significant time outside” the country. As such, the IRS believes McManus doesn’t qualify for “resident of a contracting state” under the U.S.-Irish treaty.
McManus is one of the richest Irishmen on the planet, with an estimated net worth of over $800m, so it seems he could well afford to walk away from this fight. But some of his friends told the Daily Beast in 2016 that McManus won’t let the issue die because he “started with basically nothing. His fortune stems from a £4 bet made when he was 20.”
