Race Car Driver Faces Tax Evasion Trial
Should you owe taxes on money you've never held in your hands? Race car driver and "Dancing With the Stars" winner Helio Castroneves doesn't think so. He is currently involved in a tax trial and his primary argument is that he never officially collected the $5 million in licensing money he was promised under a 1999 contract with Penske Racing. The money is still in a Dutch investment account. The core issue is whether or not his elaborate business machinations were simply a way to manage his funds or a way to dance around a date with the tax man.
The IRS says that Castroneves owes income tax on the money and that whether or not he took possession of it doesn't affect that. Curt Anderson, AP Legal Affairs Writer says that a concept known as "constructive receipt" is part of the prosecution's case against the race car driver.Castroneves, his business-manager sister Katiucia Castroneves and his lawyer Alan Miller are charged in a seven-count federal indictment with conspiracy and tax evasion from 1999 to 2004 and could each face more than six years in prison.
The jury in the trial must decide if the deal makes it simply appear that he didn't have control of the $5 million. Per the original contact $1 million went directly to Castroneves and $5 million was paid to license Castroneves' name and image. That money was supposed to be sent to a Panamanian corporation called Seven Promotions but Castroneves' lawyer, Alan Miller sent a letter to Penske to stop the move. In 2003 the money was invested with Netherlands firm Fintage Licensing B.V., where it still is. The IRS believes that this was a way to dodge taxes. Assistant U.S. Attorney Matt Axelrod has said that "A taxpayer may not deliberately turn his back upon income and thereby select the year for which he will report it."
Castroneves isn't the first celebrity to be charged with tax evasion. A list of celebrity tax dodgers includes everyone from Al Capone to Willie Nelson. In today's economic climate the jury may not be too sympathetic to the plight of a man charged with trying to avoid taxes on $5 million.