Tax Treaty Case Law around the Globe 2012

United States: Professional Golfer – The Classification of Endorsement Fees

21.1. Introduction

The case of Goosen v. Commissioner is in many ways a typical sportsman’s case, focusing on the characterization of income that is not earned directly from playing the sport. Endorsement fees pose challenges to many tax administrations, and, as apparent from this case, also to the US Internal Revenue Service (IRS), which is yet to find an appropriate solution to this challenge, even after the present case was decided. In addition, the case highlights the unique ancient UK remittance-based regime that caused much of the problem in the case, and the opportunities that are available to the very few to engage in tax planning that many would plainly view as inappropriate beyond its fairness implications.

21.2. Facts of the case

The taxpayer in the case, Retief Goosen, a professional golfer and resident of the United Kingdom, entered into endorsement agreements with numerous sponsors. Part of the remuneration from these sponsorship agreements was for permission to use Goosen’s name and likeness in advertising, and part of it was for services to be performed by Goosen.

The remuneration from endorsemen...