Racehorse owner JP McManus loses $5.22 million backgammon winnings tax case

  • Irish horseracing figure JP McManus loses $5.2M tax refund claim from US
  • Racehorse owner may appeal US court’s decision

A US federal judge has rejected a claim for $5.22 million in withheld taxes made through winnings on backgammon games claimed by Irish horseracing figure, JP McManus.

JP McManus' backgammon winnings will not escape the taxman
JP McManus’ backgammon winnings are still in the hands of the taxman. But will he appeal? Picture: Thinkstock.

Problems with the IRS

The story is a somewhat convoluted one. In 2012, McManus won a reported $17 million playing backgammon with billionaire opponent Alec E Gores, a private equity mogul he met while living in the States. He claims that his opponent sent the $5.22 million to the Internal Revenue Service (IRS) in error as withholding. McManus then filed a non-resident US federal income tax return, claiming a refund of the monies under the terms of a treaty held between Ireland and the US. Under this treaty, the Irishman would only be legally liable for a flat tax rate of €200,000 to be paid on any gambling winnings he made while in the US.

In 2014 it was reported that the IRS had approved McManus’s refund claim. However, the claim was sent to another department to be reviewed and there it stayed. As the IRS had failed to act on the claim, the Irishman filed a lawsuit. Following the Court’s ruling, McManus and his legal team are deciding whether to appeal the decision.

McManus a stubborn figure

So, why was the claim denied by the Court? Well, although McManus was an Irish resident in 2012, he avoided paying Irish income tax by spending a significant amount of time outside of Ireland. According to the IRS, this means that McManus does not qualify as a “resident of a contracting state” under the treaty.

McManus, whose fortune started with a £4 wager made when he was 20, refuses to walk away from the dispute, even though he is one of the richest Irishmen in the world – with an estimated net worth of over $800 million.

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