DAILY BRIEFING
IRS reverses field on
home-run ball
The IRS has spent the better part of the past year dealing with image problems created by devastating congressional hearings detailing taxpayer abuses. Apparently the agency still needs to take a few lessons in public relations.
On Tuesday, the IRS was forced to reverse field and pledge that it would not try to collect gift taxes if a fan caught the ball hit by Mark McGwire setting a new major league home-run record and gave it back to McGwire.
As it turned out, the screaming line drive that McGwire hit out last night for his 62nd home run of the year went over the fence in Busch Stadium, but not into the stands, and was recovered by a member of the grounds crew.
It had always been clear that if a fan had caught the ball and sold it, he or she would have to pay taxes on whatever they received for it.
But on Monday, an Associated Press reporter asked the IRS about the potential tax implications for a fan who decided not to cash in on the event, but merely to return the ball to McGwire. IRS spokesman Steve Pyrek said the not-so-lucky fan could be subject to the federal gift tax, which applies to any property given away that is worth more than $10,000.
"The giver is responsible for paying any applicable tax on any large gift," Pyrek said.
If the ball was valued at $1 million, the fan would owe at least $150,000 in gift taxes, the AP calculated.
The agency's response caused an outcry Tuesday in Washington. Sen. William Roth, R-Del., chairman of the Senate Finance Committee, said the IRS's position seemed "un-American," according to the AP. White House press secretary Mike McCurry said the report was "about the dumbest thing I've ever heard in my life."
By Tuesday afternoon, the IRS was in full retreat. "Sometimes pieces of the tax code can be as hard to understand as the infield fly rule," IRS Commissioner Charles Rossotti said. "All I know is that the fan who gives back the home run ball deserves a round of applause, not a big tax bill."
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