JUST weeks after the Philippine Bureau of Internal Revenue (BIR) froze some of boxing icon Manny Pacquiao’s assets for allegedly owing P2.2 billion ($50 million) in taxes, now, our Pambansang Kamao reportedly finds himself in another tax battle — this time with the US Internal Revenue Service (IRS).
According to initial reports from TMZ, tax documents indicate that Pacquiao allegedly failed to pay more than $18 million in income taxes.
Official documents acquired by TMZ revealed that Pacquiao did not pay $18.31 million in federal income taxes from 2006 to 2010.
TMZ said the breakdown of Pacquiao’s tax deficiency according to the IRS is as follows:
2006 — $1,160,324.30
2007 — $2,035,992.50
2008 — $2,862,437.11
2009 — $8,022,915.87
2010 — $4,231,999.01
However, Pacquiao’s lawyer, Tranquil Salvador, denied the report. “We have no knowledge of the so-called IRS tax deficiency. We, likewise, stand by the order that we will not discuss the BIR case,” he said.
Pacquiao’s camp believes that there are people who are out to damage his reputation by crafting alleged tax deficiencies to bring him down. Pacquiao insists that paid his taxes properly.
Pacquiao’s promoter Bob Arum and his company, Top Rank Promotions, contend that the boxing champ has been religiously remitting at least 30 percent of his taxable income in the US to the IRS.
So how could the Pambansang Kamao still owe Uncle Sam unpaid taxes?
In a Balitang America interview, tax expert Danny Raval, said Pacquiao could still owe the IRS money, even if he already paid his taxes in advance.
“When Pacquiao files for his tax return for that period, his tax owed gets calculated. If the tax owed is higher than the withheld amount, then he will owe something. When he files his return, he has to pay the tax owed to the IRS,” Raval explained.
Raval pointed out that because of the treaty betwen the US and the Philippines, Pacquiao should not be subjected to double taxation. If he already paid his tax dues in the US, he no longer needs to pay taxes on the same taxable income in the Philippines.
However, the BIR claims that Pacquiao still owes at least $50 million in back taxes and penalties. For tax year 2008, BIR has taken into consideration the tax credit he got from paying taxes in the US, yet BIR said he still owes the Philippine government taxes for that year.
BIR further alleges that Pacquiao has not submitted any acceptable official tax document/income tax return as proof of his tax payments to the IRS.
“If he paid his taxes here in the US, he can apply the tax paid towards his tax owed in the Philippines. That’s considered foreign tax credit. There might be a difference if the tax rate here is 30 percent and the tax rate in the Philippines is 32 percent; he might need to pay for the additional 2 percent. But generally, there’s no double taxation,” Raval said.
Raval further explained that if Pacquiao puts off paying what he supposedly owes in taxes to the IRS, they will send him letters to remind him of his debt.
“If he does not pay, then there will be lien on his properties in America. His bank accounts could also be frozen,” Raval added.
To get himself out of this tax quagmire, Raval advised Pacquiao to address the issue right away. “Don’t dwell on it. Send all the necessary and required paperwork to prove you paid your taxes. The more you wait, the more tax penalties you will have to pay,” he said.
Balitang America reported that according to Pacquiao’s camp, the Sarangani Representative is committed to work with the IRS, to resolve any outstanding issues.
His adviser, Michael Koncz said: “Manny (Pacquiao) and his financial advisors are handling the situation and have no comment other than to say the disclosure of Manny’s personal tax information is wrong, and the recent stories contain serious errors.”
“We ask that people respect Manny’s privacy and allow the tax process to run its course,” Koncz added.
But as Balitang America LA Correspondent Steve Angeles reported: “Tax woes are nothing new for the Pacman, a 2011 lawsuit brought on by his former accountants may have foreshadowed the Pacman’s global battle against the taxman.”
In an email to Balitang America, VisionQwest President and CEO Michael Lodge explained that they are concerned about Manny’s tax situation in the US and in the Philippines.
As Angeles reported, Lodge cited that Pacquiao had no accounting organization behind him to generate true income and expense numbers in tax returns.
In his email, Lodge claims Koncz never gave them proper documents to do this, and that their firm expressed concerns to Pacquiao and his Philippine-based lawyer, Franklin Gacal.
Lodge said that after they received over 4 large boxes filled with thousands of receipts to begin the documentation process, Manny terminated his contract with Vision Qwest.
VisionQwest sued Pacquiao for $649,000 in unpaid services. Pacquiao counter sued, saying that he terminated Vision Qwest’s services because the firm filed late, inaccurate and incomplete tax returns on his behalf.
In a third lawsuit against Top Rank and Koncz (which was eventually dismissed), VisionQwest claimed Arum and Koncz interfered with the contract between them and Pacquiao, as they were trying to fix the boxer’s taxes issue. Invoices show that the firm was working on Pacquiao’s taxes from 2008 to 2011. TMZ reported that the IRS is running after Pacquiao for unpaid taxes from 2006-2010.
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Gel Santos Relos is the anchor of TFC’s “Balitang America.” Views and opinions expressed by the author in this column are are solely those of the author and not of Asian Journal and ABS-CBN-TFC. For comments, go to www.TheFil-AmPerspective.com, https://www.facebook.com/Gel.Santos.Relos
