House Republican Aaron Schock of Illinois wants Olympic medalists to get applause, not a higher bill from the Internal Revenue Service, but some experts take issue with his proposal to trim winning athletes' tax bills.
U.S. athletes win performance bonuses when they capture Olympic medals: $25,000 for a gold, $15,000 for a silver and $10,000 for a bronze. Plus there's the value of the medal itself, which experts say is taxable.
Schock introduced a bill this week to amend the tax code to make an exception for Olympic medals and bonuses. If passed, it would apply to prizes and awards won this year. "One of the greatest joys of the Olympics is to watch our athletes perform at the highest levels of competition and to see them stand on the podium to be rewarded for their success," he said.
"Apparently, the sacrifices they make for their success doesn't stop once they receive their Olympic medals. The federal government has to penalize our athletes by taxing them for the medals they have rightfully earned."
At Northwestern University School of Law, David Cameron said he'd be surprised if the IRS goes after medalists for taxes on the fair-market value of their gold, silver and bronze medallions. But he believes the agency does pay close attention to dollar prizes. "Paying your taxes is not punishment," said Cameron, associate director of the school's tax program. "Why should we treat someone who earns $25,000 by running a race differently than a person who earns $25,000 by digging a ditch?"
Schock spokesman Steve Dutton said Thursday that the measure has more than 30 co-sponsors. It has been referred to the tax-writing Ways and Means Committee. A companion bill was introduced in the Senate by Sen. Marco Rubio, R-Fla.
Chicago attorney David Blum, chair of the sports law service group at the Levenfeld Pearlstein firm, said the legislation was a "nice gesture for Olympic athletes," but he would have it apply only to amateur athletes.
"There are complaints that the tax code is too complicated and there are too many loopholes and exemptions," Blum said. "This bill adds yet another exemption to the tax code."
Chicago attorney John Collins, former general counsel for the United States Soccer Federation, said the tax break "sounds nice, but would be meaningless in practice."
He said no Olympian sets out to win for either the performance bonus or cash value of a medal. "For some, such as the men's basketball team, the prize money is negligible at best," Collins added. "Kobe [Bryant] and LeBron [James] are not playing for the actual value of a gold medal."
An IRS spokesman said the agency does not comment on proposed legislation.