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Irish Gambler John McManus seeks $5.22 Million tax refund from IRS citing international treaty

September 2
10:11 AM 2015

One of Ireland's richest persons, John P. McManus, seeks $5.2 million from the U.S. government after it was wrongfully withheld from his $17.4 million gambling winnings to cover taxes.

In a complaint filed Monday in the U.S. Court of Federal Claims, McManus accuses the withholding agent of erroneously withholding the money. Meanwhile, the Internal Revenue Services may have agreed to refund the money, but has been delaying it.

His tax was reviewed twice in 2014 and was eventually remanded to anther department to be reviewed further. Since then, there were no longer actions taken for the claim.

The complaints states that the Irish horse owner and businessman is exempted from the tax on the money he won due to the U.S. - Ireland tax agreement, which is a straightforward international tax treaty.

McManus' lawyer, Houston-based Terry Giles said that they have no other choice but to take action after IRS stonewalled them. "The IRS knows what the law is; it's really pretty straightforward and simple," said Giles.

The IRS considers gambling income as taxable income. Winnings from casinos, horse races, raffles, and lotteries are taxable and mist be reported as income on the tax return, even if the individual doesn't receive an IRS Form W-2G.  

McManus reported his winnings as income on his tax return in the U.S., but his winnings are exempt from taxation in the U.S. since he is a citizen and resident of Ireland.

The U.S. - Ireland treaty signed at Dublin in July 1997 was designed to avoid double taxation and fiscal evasion to taxes on income and capital gains. This means earned income outside of Ireland is not under the provincial income tax structure of Ireland.

But McManus is subject to Ireland's domicile levy, which is a flat tax of €200,000 applicable to all Irish domiciliary whose has a worldwide income that exceeds €1 million and whose Irish property is worth more than €5 million.

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