Juan Pablo Montoya has run afoul of the Internal Revenue Service, who says the NASCAR driver owes $2.7 million in taxes and penalties. Forbes.com first reported the story.
IRS: Juan Pablo Montoya owes $2.7 million
Montoya owes the IRS nearly $3 million, in a lawsuit filed in U.S. Tax Court.
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In a lawsuit filed in U.S. Tax Court, the IRS states Montoya failed to disclose the accurate income he made in 2007 and 2008, alleging Montoya had $9.5 million in taxable income, but he and his wife reported $2.4 million. The discrepancy occurred during the period Montoya, born in Bogota, Colombia, was transitioning from competing in Formula One to NASCAR and establishing residency in South Florida.
According to Forbes.com, the case involves a tax shelter Montoya's advisers created to help circumvent a loophole centering on his status as a non-United States resident. The IRS deemed the maneuvering a "sham."
According to Montoya's lawsuit, on the advice of his father/manager, in 2001 he contributed his name, appearance, likeness, image, voice and bio -- his "Driver Identification"-- to JPM Motorsport, Inc., a Bahamas corporation owned by a Bahamian trust his dad had set up for him in 1999. At that point in 2001, his lawsuit says, he was racing Formula One for BMW and living in Monaco, with no plans to move to the U.S.
But after a disappointing Formula One season in 2006, he agreed to move to the U.S. and NASCAR for the 2007 season. In preparation for the move, his lawsuit says, Montoya and his father consulted with tax advisors in the Bahamas and United States and were advised to "domesticate his foreign assets to the United States." So he set up Monty Motorsport LLC, a Delaware limited liability company.
After seven years of middling success in NASCAR’s premier series, Montoya is moving to IndyCar next season having signed a contract to drive for Penske Racing. Ironically, Montoya will team with Helio Castroneves, who had his own tax troubles. The three-time Indianapolis 500 winner was acquitted of federal tax evasion charges in 2009.
In 251 career Cup starts, Montoya has earned $37,051,270.
