NASCAR Sprint Cup Series driver — at least for two more races — Juan Pablo Montoya is being penalized, but not by NASCAR. The US Internal Revenue Service claims that Montoya owes $2.7 million in back taxes and penalties.
According to a report in Forbes magazine, Montoya didn’t report all of his income when filing income taxes in recent years. Montoya has admitted to not reporting some $800,000 in income but is denying the remainder of the amount.
At the center of the dispute is the sale of JPM Motorsport, a company Montoya’s father set up to manage his licensing rights. After that sale, an LLC, called Monty Motorsport, was set up in Delaware upon the advice of tax advisers who told Montoya to “domesticate his foreign assets to the US.”
According to the Forbes report, the sale was for $15 million and in the time since Monty Motorsport amortized, or wrote down the value of, its $15 million investment. The IRS disallowed the deductions on the grounds that the reason for Montoya’s actions was to “improperly claim amortization deductions in self-created intangibles and to artificially create basis for such deductions.”
Montoya is slated to make the move to Penske Racing at the end of the current NASCAR season to compete in the IndyCar Series in 2014. There, he’ll be a teammate to Helio Castroneves, who was acquitted on felony tax charges in 2009.
– Photo courtesy of Getty Images for NASCAR