JP McManus wants Revenue letter rejected in $5.2m tax case

Lawyers acting for JP McManus in his legal battle with US authorities over taxation on $17.4 million of gambling winnings have suggested officials within the Revenue Commissioners in Ireland “resent” the businessman’s success.

The claim is made in documents he filed this week to a US court rebutting a claim by US authorities that he should pay a $5.2 million tax bill on the cash, which he won in a game of backgammon with US tech billionaire Alec Gores.

In the latest filings, Mr McManus also launches an extraordinary attack on US tax officials, whom he accuses of “misrepresenting” rules and “making up” facts about how gambling winnings ought to be taxed.

The Limerick businessman has asked the court to disallow as evidence a letter sent from Revenue to its US counterpart, the Internal Revenue Service (IRS), which entered the letter in the McManus case.

The letter, from which the name of the author is redacted, states that the €200,000 domicile levy paid in Ireland by Swiss-resident Mr McManus is not a covered tax under double taxation agreements between Ireland and the US.

This would appear to undermine arguments by Mr McManus that he should be exempt under double taxation rules from paying the $5.2 million tax bill in the US, on the basis that he has paid the domicile levy here.

The IRS recently submitted to the court a newspaper article by the Irish edition of the Sunday Times, which also quoted Revenue as saying the domicile levy is not a covered tax. Mr McManus has also asked for the article to be thrown out of evidence in the case.

The businessman suggests that the Revenue official who sent the letter may be the same unnamed official who gave the quote to the Sunday Times. It is, however, generally that newspaper's policy to not use the names of organisational spokespersons, preferring instead to attribute quotes to the organisation.

“We have no idea who is being quoted or what their authority is. Without more the unnamed source is meaningless and unreliable to the extreme,” said Mr McManuc’s lawyers.

“Ireland is a small country of less than 5 million people. Mr McManus is one of the best known Irishmen who attracts newspaper attention. [HIS]counsel believes it is not a stretch to imagine that a Revenue agent in Ireland could resent Mr McManus’ success.”

The filing says the decision to redact the identity of the Revenue official is "troubling". It suggests the IRS has no arguable case to keep "Mr McManus' money" without the letter and Sunday Times article.

Mr McManus and his lawyers also turn their fire on the IRS, which insists that the $5.2 million tax deduction is proper. It is accused of “misrepresenting” to the court the meaning of Irish rules around the taxation of gambling.

The Limerickman’s filings accuse the IRS of a “propensity to overstate, or in some cases, just make up facts”. Mr McManus accuses the US agency of trying to provoke an “emotional reaction” by painting him as a tax avoider.

The IRS is accused of "intellectual dishonesty" in the way it portrayed to the court past public statements by Michael Noonan, the Minister for Finance, concerning whether the levy is an income tax or a wealth tax.

Mr McManus says the authors of the US-Ireland double taxation treaty did not intend for gambling winnings to be taxed, but added: “Whether or not [THEY]are happy 20 years later with those decisions is not relevant.”