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Castroneves facing new US tax pressure

Helio Castroneves is facing renewed demands from the US Internal Revenue Service over allegedly unpaid taxes dating back over a decade, which nearly saw him go to jail in 2009.
Helio Castroneves thought that his tax problems were finally behind him, after he walked into the Miami office of the Internal Revenue Service and handed over a cheque for $5m in August 2009. That followed the IRS' highly publicised criminal prosecution of Castroneves for unpaid taxes and criminal tax evasion that could have seen the popular driver sent to jail earlier in that year.

But it emerged at the weekend that the IRS is now demanding a further $6.4m from the IndyCar star - which includes a hefty penalty levied for alleged tax fraud.

In the original 2009 criminal court case, the jury needed six days of deliberations on complex legal and accounting issues to reach a verdict. They decided that case in favour of Castroneves, his sister and manager Katiucia and his sports attorney Alan R. Miller, and acquitted them on charges of conspiracy and criminally evading the payment of taxes. If he had been convicted, Helio could have faced a lengthy jail sentence.

The disputed taxes were on income he received from Penske Racing Team between 2000 and 2004 for the use of his name, image and endorsement on licensed merchandising sold by the team. The income - around $15m - was supposed to have be placed in a Panamanian tax shelter but instead was transferred to a Dutch annuity account and then allegedly not properly disclosed to the IRS for taxation purposes.

Just weeks after the verdict was handed down and Helio walked free, he went on to win his third Indianapolis 500. Later in the year he handed over the $5m cheque to cover the unpaid taxes as well as three subsequent years of income.

But now, according to The Miami Herald at the weekend, the IRS have filed a "notice of deficiency" in the US Tax Court and claim he still owes $3.7m in back taxes over the same 2000-2004 licensing issue.

Furthermore - and despite the 2009 criminal court findings - the IRS asserts that it has "determined that all or part of the underpayment of the required taxes on the returns ... is due to fraud" and accordingly levied an additional $2.7m penalty, and are consequently demanding over $6m in immediate payments by Castroneves.

“It's almost like a re-trial,” said the Miami attorney who represented Castroneves in 2009, David Garvin. "Our position was, and is, that he properly handled this as a taxpayer."

Gavin maintains that his client paid the taxes to the IRS in 2009 promptly after receiving the funds from the Dutch annuity company, "but that doesn't seem good enough for them." Instead, he said that the IRS are using the lower burden of proof in civil court - as opposed to criminal court - in "a desire to punish [Castroneves] and justify [IRS] use of resources in the unsuccessful criminal case."

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Danimal - Unregistered

May 12, 2011 1:45 PM

Typical IRS behavior they lost their trumped up case, got paid anyway and now they have a grudge against Helio. They want to run him out the country or break him. Funny how they let all the Lehman Brothers, Countrywide Home Loan mortgage and the rest of the security selling weasels get away with a trillion dollar theft of the U.S. banking system.


May 12, 2011 4:33 PM

Spot on Danimal The US govt let all the Wall St crooks from Brokers, banks, and mortgage companies from Lehman Bros, Goldman Sachs, AIG, Countrywide etc not only fleece the American public and put the economy in a tail spin but turn around and loot the US govt for bail out money as well when they don't pay their fair amount of taxes any way. But the Govt is focused on a single guy who not only was found innocent but actually PAID money for the time in question. For the govt to turn around with ANOTHER case that is built probably on a deck on cards shakier than the first is despicable at best.

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