Filipino boxer Manny Pacquiao is facing some serious tax issues–to the tune of $68 million in unpaid tax debt. Both his homeland, the Philippines, and the IRS are out to get their cut, and with his level of celebrity, his financial situation is taking a beating.
Being an international celebrity has its rewards, but comes at a hefty price if you plan on earning money while in the United States. With its top tax rate at $39.6%, the IRS is always hot on the trail of celebrities who work worldwide, looking to for both high-tax stories and much-needed money.
Recently released was this year-by-year breakdown detailing his tax debts from 2006-2010.
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
Pacquiao’s response to this information? “This is no doubt part of demotion job against me.” He said that the IRS’ claims (via TMZ) are not true, that before he even climbs out of the ring he has Top Rank Promotions big boss Bob Arum deducting US taxes. The debt was already paid, as the boxer stated “in the US, taxes are immediately deducted from your income.”
This $18 million tax debt claim came up shortly after it was reported that his home government has been trying to collect 2.2 billion pesos ($50.3 million) in unpaid taxes, penalties, and interest. In going after the dough, Philippine tax authorities issued a warrant to 36 banks to seize his assets, has had his bank accounts frozen, and has also frozen his wife’s accounts. The levy is due to claims that the boxer failed to prove he had paid taxes to the United States.
The issue comes down to this: what was earned, and where and how it was taxed.
“Based off the limited information available, it sounds like Manny’s case is a fairly typical occurrence,” says Harry Langenberg Managing Partner at Orange County based Optima Tax Relief. “Most American’s don’t realize how common IRS actions are. It’s estimated that about 8% of taxpayers are currently delinquent. Federal workers alone make up for over a billion dollars in delinquent taxes” he adds.
A common case with celebrities, Lionel Messi and Lauryn Hill included, details about how their tax affairs are managed are only known by agents and business managers. Despite being a lawmaker in the Sarangani province, and fairly proactive in his tax planning, Manny is no exception.
As Pacquiao’s Top Rank promoter has yet to produce the official IRS documents, saying that he’s sent the request months ago but is waiting for documentation, he has instead submitted correspondences showing that he did indeed pay US taxes during ’06 to ’10 via withholding for the boxer. Manny himself says that he wasn’t required to pay any additional taxes to the Philippines, especially not $50 million, because of a treaty that prevents double taxation.
The fighter known as PacMan is one of the Philippine’s richest citizens, but since his government seized and levied his assets and accounts, he’s actually had to borrow money to contribute to the relief effort after Super Typhoon Haiyan, which devastated his country in November 2013. Although he’s still considered a wealthy, well-off athlete, it’ll be difficult to pay a $68 million debt to two separate governments when he can’t even head to an ATM for a couple bucks.
Somehow, he’s calm about his situation. Pacquiao sees this issue as another test, a challenge to overcome. “When God and truth are on our side, who can put us down?” Hopefully not the IRS.