It is the phrase that no Texas resident wants to hear: “You are being audited.”
Audits can prove taxing not only on residents’ finances, but also on their emotional health. In some cases, the Internal Revenue Service even requires individuals to pay overdue taxes through wage garnishments and other severe methods, although those people may not have known that they owed additional money. One famous race car driver has found himself seeking tax relief after the IRS claimed that he failed to report more than $7 million in income during the 2007 and 2008 calendar years.
The 38-year-old driver, Juan Pablo Montoya, is accused of omitting millions of dollars from those tax returns. Even though the Colombian citizen admits that he likely overlooked about $800,000 in receipts and partnership income, he says the IRS figures are entirely inaccurate.
News reports show that the biggest point of contention in the man’s tax case is a move he undertook to distribute the rights to his image before he made a move to the United States; he currently lives in Miami. The man had been racing in other locations throughout the world before relocating. Before arriving in the States, the man established his own limited liability company in the state of Delaware. In 2006, shortly before coming to America, the man allegedly sold the rights to his image to his own company. He then attempted to claim the value of the investment as amortized deductions that the IRS refused to honor.
The man is also accused of manipulating his residential status to avoid paying taxes on a multi-million dollar personal jet that he purchased for traveling to various NASCAR races. That move seems legitimate, however, according to FAA regulations, which put certain restrictions on non-U.S. citizens owning aircraft in the country.
Ultimately, tax maneuvers using business and other assets can provide reasonable accommodations for entrepreneurs such as this driver. The man has a right to work within the U.S. tax code to provide personal benefit while still complying with the law. Defendants who are accused of circumventing these procedures may benefit from the assistance of a qualified tax attorney, who can help them understand their legal and financial rights.
www.forbes.com, “IRS says race car driver Juan Pablo Montoya used sham to wrongly deduct millions” Janet Novack, Nov. 03, 2013