NASCAR driver Juan Pablo Montoya is currently facing a series of tax law violations in the U.S. Tax Court, for allegedly failing to pay nearly $3 million in federal back taxes owed to the Internal Revenue Service.
The IRS recently filed a lawsuit against the driver for these back taxes, arguing that he did not disclose the accurate income he made in 2007 and 2008, according to an exclusive Forbes report. The agency further explained that Montoya made roughly $9.5 million in taxable income, but only reported $2.4 million. The IRS is seeking to recoup $2.7 million in back taxes, interest charges, and penalties.
However, the discrepancy may largely stem from issues that arose when Montoya – a Colombian native – transitioned to NASCAR and sought residency in the U.S., the news source explained. Under the counsel of advisors, the driver argues that he was encouraged to set up a limited liability company in the Bahamas, which was responsible for managing income earned from use of his name and likeness. Upon joining NASCAR and establishing residency in the U.S., he was then told to “domesticate his foreign assets to the U.S.,” Forbes reported. Montoya claimed a number of deductions associated with transitioning a foreign company to a domestic company, which the IRS calls a “sham” strategy.
Montoya affirmed that he had $800,000 more in income than he reported on his tax returns during the years in question, but is disputing the remaining $2.7 million part of the IRS audit. At present, Montoya is not being charged with a crime.
In an interesting twist, Montoya is joining Penske Racing in 2014 to run in the IndyCar Series full-time with his future teammate Helio Castroneves, who was acquitted on felony tax charges in 2009. Overall, in 251 career Cup starts, Montoya has earned roughly $37,051,270.
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IRS Says Juan Pablo Montoya Owes $2.7 Million in Back Taxes
Author: Scarinci Hollenbeck, LLC
NASCAR driver Juan Pablo Montoya is currently facing a series of tax law violations in the U.S. Tax Court, for allegedly failing to pay nearly $3 million in federal back taxes owed to the Internal Revenue Service.
The IRS recently filed a lawsuit against the driver for these back taxes, arguing that he did not disclose the accurate income he made in 2007 and 2008, according to an exclusive Forbes report. The agency further explained that Montoya made roughly $9.5 million in taxable income, but only reported $2.4 million. The IRS is seeking to recoup $2.7 million in back taxes, interest charges, and penalties.
However, the discrepancy may largely stem from issues that arose when Montoya – a Colombian native – transitioned to NASCAR and sought residency in the U.S., the news source explained. Under the counsel of advisors, the driver argues that he was encouraged to set up a limited liability company in the Bahamas, which was responsible for managing income earned from use of his name and likeness. Upon joining NASCAR and establishing residency in the U.S., he was then told to “domesticate his foreign assets to the U.S.,” Forbes reported. Montoya claimed a number of deductions associated with transitioning a foreign company to a domestic company, which the IRS calls a “sham” strategy.
Montoya affirmed that he had $800,000 more in income than he reported on his tax returns during the years in question, but is disputing the remaining $2.7 million part of the IRS audit. At present, Montoya is not being charged with a crime.
In an interesting twist, Montoya is joining Penske Racing in 2014 to run in the IndyCar Series full-time with his future teammate Helio Castroneves, who was acquitted on felony tax charges in 2009. Overall, in 251 career Cup starts, Montoya has earned roughly $37,051,270.
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