Given the large level of income professional athletes often make, it is not unusual to see them grab the headlines with news related to their income tax. Despite the amount of money they make, those headlines are not always good news.
Such is the case with Robinson Cano and Manny Pacquiao, whose income tax numbers were in the news recently for entirely different reasons.
Cano Nets Extra $42 Million Because of No State Income Tax
Robinson Cano is a 31-year-old professional baseball player. To date Cano had played baseball with only one team, the New York Yankees. However, he made news recently when he signed a 10-year-deal with the Seattle Mariners for $240 million.
The Yankees had reportedly offered Cano a 7-year-deal for $175 million. It does not take a mathematician to calculate that Cano made the smart decision from a purely financial standpoint when he accepted the offer from the Mariners, as he stands to make $65 million more than if he had accepted the offer from the Yankees. However, the benefit to Cano does not stop there.
New York, the home of the Yankees, and New Jersey, where Cano lives presently, both have state income tax. The state of Washington, where the Mariners play roughly half their games each year, does not have a state income tax. By signing with the Mariners and relocating to Washington, Cano will pay the IRS approximately $42 million less in income tax than if he had stayed with the Yankees.
IRS Tells Pacquoia he Owes $18 Million in Federal Income Tax
Manny Pacquoia is a professional boxer who had historically been most famous for winning titles at eight different weight classes. However, Pacquoia is becoming notorious for issues related to paying his income tax.
According to various news agencies, the IRS is pursuing Pacquoia for approximately $18 million in unpaid income tax on earnings for the five years between 2006 and 2010.
To his credit, Pacquoia has denied the details of the story through one of his handlers.
“Manny and his financial advisors are handling the situation and have no comment other than to say the disclosure of Manny’s personal tax information is wrong and the recent stories contain serious errors,” read a statement released by Michael Koncz, Pacquiao’s advisor. “Manny is committed to working with the IRS to resolve any outstanding issues. We ask that people respect Manny’s privacy and allow the tax process to run its course.”
This is not the only recent income tax news involving Pacquoia. In November, the Philippines, which is Pacquoia’s home country, froze Pacquoia’s bank accounts and other assets because they claimed he owed them approximately $50 million in unpaid income tax related to earnings in 2008 and 2009.
As is the case with the allegations by the IRS, Pacquoia had denied he owes that money to the Philippines, as he claimed he paid the appropriate income tax to the IRS and the IRS should settle any tax claims of the Philippines. However, given the tax claims of the IRS that broke this week, it Pacquoia’s version of events may not be accurate.
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Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.