World Cup champion Spain just won $50 million

And the IRS gets a cut
‘It doesn’t make a difference who wins the game. The IRS will get a piece.’
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The IRS is set to tax money made on U.S. soil during the World Cup, including prize money, sponsorship deals and paid appearances.

The IRS reached a consensus with Canada and Mexico to determine how to identify U.S.-, Mexican- and Canadian-sourced income from the tournament.

Participating players, coaches and staff face complex tax issues, including state-level “jock taxes” and varying international tax treaties.

The World Cup is the globe’s largest sporting event — and, this time, it’s also a major tax event for the IRS.

Even before Sunday’s championship match between Spain and Argentina, there had been some clear winners at the World Cup that was co-hosted by the U.S., ranging from Cape Verde’s little-known goalkeeper to ranch salad dressing.

Massive cash winnings were at stake in the 48-nation tournament. There were also sponsorship deals and paid appearances in play for established superstars and competitors with newfound fame alike.

Any money that’s made on American soil, generally speaking, is taxable by the Internal Revenue Service, according to experts.

Spain won the championship, 1-0, on Sunday, along with the $50 million first-place prize from FIFA. That’s just a sliver of the $655 million total pot for the competing national teams, depending on performance.

“It doesn’t make a difference who wins the game. The IRS will get a piece,” said Robert Raiola, director of the sports and entertainment group at the accounting and tax advisory firm PKF O’Connor Davies. That goes for the coaches, team staff and referees, along with players, he added.

On the tax-complexity scale, the World Cup ranks an 8 out of 10.

All the teams that participated and left with memories of being a part of the World Cup experience will also leave with a tax bill of some sort, he said.

No matter the sport, professional athletes almost always lead tangled tax lives. They play all over the world, in places with varied tax codes. Their compensation can hinge on meeting certain milestones, such as scoring a certain number of goals, which can make their income streams less predictable than a regular paycheck. They may be performing the work as an employee or as an independent contractor. Then they may have extra income from royalties, endorsement deals and other business arrangements.

The World Cup adds a slew of extra tax issues. For example, the U.S. may have tax treaties with certain countries, and these deals may feature carve-outs on money paid to athletes.