Tax on $17M Won in Backgammon Turns on U.S.-Irish Treaty

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By Erin McManus

June 22 — The right of the U.S. to collect tax on an Irish citizen's $17.4 million in winnings from a marathon backgammon match depends on whether the Irish domicile levy is a covered tax under the U.S.-Ireland tax treaty ( McManus v. United States, Fed. Cl., No. 1:15-cv-00946, response filed 6/20/16 ).

Irish citizen J.P. McManus argued in his June 20 response that he is entitled to the full $5.22 million withheld from his winnings in a three-day backgammon match in the U.S. against a U.S. citizen in 2012, because the 200,000 euros ($227,000) he paid to the Irish tax authority under Ireland's domicile levy was a covered tax under the treaty, making McManus exempt from U.S. income taxes.

The Internal Revenue Service argued in a June 1 filing that the domicile levy wasn't a “covered tax” under the treaty, because it wasn't a full or comprehensive tax on an individual's worldwide income based on his personal attachment to the taxing country. The IRS supported this assertion with a redacted letter from Ireland's competent authority that stated the domicile levy wasn't covered by the treaty.

‘Rogue Tax Agents.'

McManus countered that the letter couldn't be admitted into evidence in a U.S. court, because with the author's name redacted, it couldn't be authenticated. McManus claimed in his April 25 motion for summary judgment filed with the U.S. Court of Federal Claims that the letter may have been authored by “rogue Irish tax agents” with a “vendetta” against McManus.

The IRS also argued that McManus, as a resident of Switzerland, never paid any income tax on the gambling winnings, and only paid the modest domicile levy to his native country in the year he won the backgammon match.

McManus responded that the IRS was making an emotional argument, because Ireland doesn't tax gambling winnings unless the taxpayer is in the trade or business of gambling.

McManus is represented by Terry Giles and Mark Curry. Jason Bergman of the Department of Justice Tax Division is lead counsel for the government.

To contact the reporter on this story: Erin McManus in Washington at

To contact the editor responsible for this story: Brett Ferguson at

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