Wednesday, November 27, 2013

Pacman in the midst of tax battle

Filipino boxing champ Manny "Pacman" Pacquiao.
After Filipino boxing champ Manny  "Pacman" Pacquiao beat up Mexican-American Brandon Rios to win the IBF welterweight belt in Macau on November 22, 2013, he felt ecstatic to be back home owing to a warm welcome accorded to him and his team by the people of General Santos City, Mindanao
for bringing another prestige to the Philippines.

Obliviously, Pacman never knew that another legal battle was looming in the horizon. This after the Philippines' Bureau of Internal Revenue (BIR) came out with a Notice of Garnishment that led to the freezing of his bank accounts in Metro Manila for his failure to pay his taxes for the years 2008 and 2009.

Why is this so? According to BIR chief Kim Henares, Pacquiao failed to settle his tax problems amounting to some P2.2 billion for the years 2008 and 2009, despite the two-year grace period given to him by the tax bureau.

But Pacquiao said in an interview that his lawyers already submitted to the BIR all the documents needed to prove that he had paid his income taxes for the period in question with the U.S. Internal Revenue Service (IRS).

"I'm spreading the word of God. How can I tell a lie?" Pacquiao told media in several occasions.

Non-resident aliens are required by US federal laws to pay their income taxes by filling up tax forms like the 1040NR or the 1040 for working individuals every year.

Despite this, it seemed the BIR was reluctant to accept the documents that his lawyers presented as proofs that he had already paid his taxes in the United States after each fight in 2008 and 2009.

"The reason why the BIR just couldn't accept the proofs his lawyers presented to us is because the documents came from Top Rank Promotions and not from the IRS," Henares explained. "Anybody can just do the same," she added.

In practice, filing of income tax returns in the United States can either be filed electronically or by mail. If a tax filer wishes to pay his individual tax return by mail, all he does is to fill up Form 1040-V. Form 1040-V is a statement you send with your check or money order for any balance due on the “Amount you owe”
line of your yearly tax payment like Form 1040NR,  Form 1040, Form 1040A, or Form 1040EZ.

In fact, Mr. Bob Arum, CEO of Top Rank Promotions has even criticized the BIR for making it a burden for Pacquiao even if it wasn't his fault to experience such a big tax mess. Arum added that every time Pacquiao gets his prize money,  a total of 30 percent of that is immediately wired to the IRS and the IRS
sends an acknowledgement that it indeed received the tax payment.

Arum explained that BIR chief Henares must have checked Pacquiao's tax records with her counterparts in the U.S. as to whether the boxer had indeed paid his taxes. She could have requested the IRS to furnish the BIR with Pacquiao's tax records during the years in question. However, Arum suspected that the BIR
official failed to do so.

Henares, however, insisted that since the case is already filed before the Court of Tax Appeals (CTA), Pacquiao can ventilate his grievances and clear his name at the CTA rather than play it up in the media.

Likewise, Henares denied that all his bank accounts were put under garnishment. She had admitted that only a total of P1.1 million from his two bank account were frozen. "How could Pacquiao say that the BIR has garnished all his bank accounts?" Henares asked.

"What Pacquiao can do is to ask his lawyers and accountants the tax records that they had prepared and sent to the IRS," a Fil-Am Certified Public Accountant (CPA) said when interviewed by ABS-CBN.

The BIR official also reminded Pacquiao to pay his taxes amounting to more than P200 million after he won a fight with Rios in Macao where he earned an estimated $18 million in prize money.  Otherwise, the interests will accumulate and it would be hard on his part to pay his taxes, Henares said.

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