GENERAL SANTOS CITY, Philippines - Is Manny Pacquiao losing money?
Beleaguered Pacquiao has been alternating between saying all his tax woes are being taken care of and refuting claims he owes the US IRS back taxes. (READ: Pacquiao: Unpaid $18.3M taxes in the US)
But when slapped with a copy of a Notice of Federal Tax Lien, his chief “financial advisor” Michael Koncz said the lien was for disallowed expenses for years 2005 to 2009 which they have been contesting with the IRS for the last 3 years. A lien entitles the government to sell a taxpayer’s identified properties to pay for his or her outstanding tax obligations.
The document, obtained by Rappler from a source who requested anonymity, indicated that Pacquiao owed the US government a total of US$18,313,668.79 broken down as follows:
The IRS notice was dated Nov 22, 2013 and filed with the County of Los Angeles on November 25.
The Rappler source said he obtained a certified true copy on December 9, weeks after a flurry of charges and countercharges between the camp of Manny Pacquiao and the Bureau of Internal Revenue. The BIR came running after Pacquiao after his victory over Brandon Rios in Macau.
Another document dated November 27, e-mailed by another source who also requested that his identity be withheld, suggested that a bank had apparently sent Pacquiao a letter notifying him of the IRS lien.
Pacquiao was notified by the bank – which was unidentified – that unless the IRS issues a “release of levy” by January 10, the bank will hold whatever deposits he has on his bank account for 21 days after which it will remit Pacquiao’s money to the IRS to satisfy the lien imposed on the Filipino boxing champion.
The bank, however, did not indicate in the letter the amount of deposits Pacquiao has.
The IRS has always been mean against tax delinquents and tax evaders. If it imposes its will on the $18.3 million lien against Pacquiao, the Filipino could end up not receiving a single penny for his Rios victory.
Photo by Edwin Espejo/Rappler
For the Rios fight, his promoter Bob Arum of Top Rank said Pacquiao was guaranteed $18 million. That means he is still $313,668.79 short of his tax obligations – assuming his Rios fight did not generate revenue for him to get the upside of his PPV fight.
He might still owe the IRS even more as a 30% withholding tax is automatically deducted from his purse.
The US-based VisionQwest, which was once hired by Pacquiao to handle his financial affairs in the US, recently issued a press statement stating among others, “Manny had no accounting organization behind him to generate true income and expense numbers to file a tax return.”
Pacquiao hired VisionQwest sometime in 2010 as his US accounting firm when reports surfaced that his earnings could no longer be traced.
Instead of being given books of accounts or a ledger, VisionQwest reportedly was given 4 large boxes of receipts and handwritten reports from Koncz.
VisionQwest said, “However, Michael Koncz was not able to provide documentation to backup (sic) the numbers. In order for an expense item to be allowed for deduction on the tax return it has to have a receipt or canceled check, bank record to back up the expensed item. We expressed to Manny and Franklin Gacal through a letter that we had no confidence in the numbers that had been prepared because there was no backup.”
It added, “When an audit is being performed by the IRS they are looking at income, expenses, taxes paid, and the net result that the IRS will make a determination on. If income has not been reported correctly and there is no documentation from the taxpayer the deduction will be disallowed by the IRS and there will be a tax due. We have expressed our concerns very clearly to Manny and his Philippine legal counsel.”
Several months later, Pacquiao terminated the services of VisionQwest after the two parties could not agree to work together starting from Ground Zero.
The two however filed charges and countercharges against each other for the failed partnership, with VisionQwest suing Pacquiao for payment of the cash advance the Filipino reportedly took from the US accounting firm.
Pacquiao’s woes may have started in 2007 when, against the advice of his friends, he ran but lost in the congressional race in General Santos City against then re-electionist Darlene Antonino Custodio.
Reports said Pacquiao spent P140 million for his losing bid. That was practically all his savings, those who knew him well said. That could have started his vicious cash-advance-cycle-of-a-lifestyle as he turned to Arum for his bourgeoning entourage and high-flying upkeep. No problem then. He was on the top of the heap.
Then in 2010, he supposedly went all in and reportedly spent $6.6 million to earn a seat in the House of Representatives. – Rappler.com