Manny Pacquiao's San Diego bean counter battles Uncle Sam

NEW YORK--Floyd Joy Mayweather Jr. finds no joy in battling the Internal Revenue Service. Sure, he jokes about it and says he has no overdue obligations to the Tax Man but they don’t file $6 million liens as a practical joke.

Manny Pacquiao has a bean counter, an accountant in San Diego, who monitors the days he spends in the United States so that the Pinoy Idol can avoid a monstruous bite on not only the money he makes here but on his worldwide income.

It’s called the Substantial Presence Test and Pacman promoter Bob Arum detailed it for me Wednesday night.

“It’s calculated like this,” Arum said on the eve of the Pacquiao-Miguel Cotto fight kickoff press conference at the new Yankee Stadium, “you take one sixth of Manny’s days in the U.S. for 2007.

“Then you take one third of his days in the U.S. for 2008. Then they compute 100 percent of his days spent in this country for 2009.

“If that adds up to 183 days, then Manny is screwed. Manny has to be under a total of 183 days or else they can claim tax on his worldwide income. What Manny wants to be is substantially under a total of 183 days in the U.S. He doesn’t want it to be any close calculation or for there to be any dispute.”

This is one test that Pacquiao does not want to “pass.”

He’s better off doing the legal limbo and staying beneath the 183 day threshold.

Now I hope I got this right as I was flummoxed by my basic accounting course in law school.

Arum has expertise in these matters as he got into the boxing business as a U.S. attorney who was sent to count gate and TV receipts for Uncle Sam on a heavyweight championship bout.

When Arum saw all the money involved, he made a career switch, leaving Attorney General Robert Kennedy’s team and becoming a fight promoter.

When it counts, Arum counts pretty well.

And Pacquiao is counting on the count of that accountant in San Diego.

FROM THE IRS.GOV WEBSITE:

February 2009

Each year, thousands of nonresident aliens are gainfully employed in the United States. Thousands more own rental property or earn interest or dividends from U.S. investments. This article discusses the tax filing requirements for nonresident aliens.

First step: Determining Alien Tax Status

If you are an alien (not a U.S. citizen), you are considered a nonresident alien unless you meet one of two tests: the green card test or the substantial presence test for the calendar year (January 1 – December 31). If you do not meet either the Green Card Test or the Substantial Presence Test, then you are a nonresident alien.

Green Card Test: You are a Lawful Permanent Resident of the United States, at any time, if you have been given the privilege, according to the immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if the U.S. Citizenship and Immigration Service (USCIS) issued you an alien registration card, Form I-551, also known as a "green card." You continue to have resident status, under this test, unless you voluntarily renounce and abandon this status in writing to the USCIS, or your immigrant status is administratively terminated by the USCIS, or your immigrant status is judicially terminated by a U.S. federal court.

Substantial Presence Test: You will also be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:

1.
31 days during the current year, and
2.
183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
*
All the days you were present in the current year, and
*
1/3 of the days you were present in the first year before the current year, and
*
1/6 of the days you were present in the second year before the current year.

Example:
You were physically present in the United States on 120 days in each of the years 2006, 2007, and 2008. To determine if you meet the substantial presence test for 2008, count the full 120 days of presence in 2008, 40 days in 2007 (1/3 of 120), and 20 days in 2006 (1/6 of 120). Since the total for the 3-year period is 180 days, you are not considered a resident under the substantial presence test for 2008.

Resident aliens are generally taxed in the same way as U.S. citizens. This means that their worldwide income is subject to U.S. tax and must be reported on their U.S. tax return (Form 1040, U.S. Individual Income Tax Return; Form 1040A, U.S. Individual Income Tax Return or Form 1040EZ, Income Tax Return for Single and Joint Filers with No Dependents).

Source: http://www.examiner.com/x-5699-NY-Boxing-Examiner~y2009m9d9-Manny-Pacquiaos-San-Diego-bean-counter-battles-Uncle-Sam