Mar
10
2011
Sergio vs. The IRS
By Conor Nagle under European PGA Tour

Sergio: not a fan of the Welfare State

I’ve just come across a strange article on GolfDigest.com from a couple of days ago. Apparently, the IRS has filed petitions against Sergio Garcia and Retief Goosen for back taxes and penalties payable on US winnings from nearly a decade ago. Both disputes revolve around the proportion of income designated as payment of royalties, as opposed to payment for personal services. You’re yawning…

But did I mention that Sergio could owe up to $1.72m?

From Golf Digest:

“Retief Goosen and Sergio Garcia are both fighting IRS rulings about this right now. The IRS argues that the two international stars have underpaid their U.S. taxes by counting too much of their endorsement income as royalties.

How much? A U.S. Tax Court filing for Goosen shows the IRS wants nearly $160,000 in back taxes for 2002 and 2003–plus almost $32,000 in penalties.

Garcia’s numbers are significantly higher: The IRS claims he owes $1.72 million for 2003 and 2004. Any additional penalties go unmentioned in Garcia’s petition to the court.

Lawyers for both golfers argue that they calculated their taxes properly and that the IRS is in error.”

This isn’t the first time Sergio’s had tax issues. He refused to play in the European Tour’s flagship event, the BMW PGA Championship, last year in protest against Britain’s 50%+ tax on high-earning foreign athletes. Bearing his current IRS woes in mind, one can marvel at the prescience of European Tour Director George O’Grady, who remarked of Garcia at the time: “I don’t understand why he can’t play. Does he think he shouldn’t pay any tax at all?”

Conor