Obama ends 'victory tax' on some U.S. Olympic athletes

By Darlene Superville
Associated Press

WASHINGTON (AP) — Olympic athletes who bring home the gold, silver and bronze for Team USA will no longer pay a “victory tax” for their achievement under a bill President Barack Obama recently signed into law.

The IRS will now be prohibited from taxing most medals or other prizes awarded to U.S. Olympians.

The bill was among more than a dozen pieces of legislation signed by Obama, including measures to help sexual assault victims and parents with babies in need of a diaper change.

Another new law targets the growing worldwide problem of illegal wildlife poaching and trafficking.

The U.S. Olympic Committee awards cash prizes to medalists, ranging from $25,000 for gold, $15,000 for silver and $10,000 for bronze.

The cash prize comes on top of the value of the medals themselves: $600 for gold and $300 for silver; bronze medals aren’t worth much.

The money had been considered earned income, making it subject to tax. Lawmakers who objected to the tax passed legislation to eliminate it, citing the levy as an unfair burden on U.S. athletes who spend years sacrificing and training in their sport, often at great financial expense.

But not all Team USA medalists will be exempt. The tax will still apply to high-profile athletes who earn at least $1 million a year, like swimmer Michael Phelps.

Other measures signed into law last Friday will:

• Establish a federal bill of rights for sexual assault survivors to ensure that plaintiffs in federal criminal cases have the right to a sexual assault evidence collection kit, to be told of the results and to be notified in writing before the kit is destroyed. The law was spurred by the case of Amanda Nguyen, a former Harvard University student who was sexually assaulted in Massachusetts. Nguyen said she was repeatedly required to return to
Massachusetts to prevent her rape kit from being destroyed and also had a hard time keeping up with developments in the legal case.

• Make federal buildings more family friendly by requiring that baby-changing stations be installed, within two years, in restrooms in federal buildings that are open to the public. That would include courthouses, post offices, Social Security offices and some government-run museums like the Holocaust Memorial Museum and the National Archives.

• Boost efforts to combat wildlife poaching and trafficking by supporting the work of a presidential task force. The law also directs U.S. agencies to work with countries affected by wildlife crime, such as Zimbabwe, where the 2015 killing of Cecil the lion by an American during an illegal hunt sparked a worldwide outcry. Prosecutors will get more tools to go after individuals involved in trophy hunting and other crimes while the State Department will provide Congress annually with a list of countries considered major sources, transit points or consumers of wildlife trafficking.

For Phelps, the tax bill for the five gold and one silver he won in Rio could cost him as much as $55,000. Gymnast Simone Biles faces a possible $43,000 tax bill for landing four golds and a bronze.

“Most of these athletes will never sign an endorsement deal or a professional contract, which is why it’s so important that these athletes will no longer be forced to pay a big tax bill when they achieve their Olympic dreams representing the United States,” said Rep. Robert Dold, R-Ill., sponsor of the bill, which cleared the House by a vote of 415-1.

Rep. Jim Himes, D-Conn., cast the lone vote against what he called “bad policy.”

The law applies retroactively to the 2016 Olympic and Paralympic Games in Rio De Janeiro, Brazil. It will not affect taxes on an athlete’s endorsement or sponsorship income.

Team USA brought home 121 medals from Rio Games, including 46 gold medals.
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Associated Press writer Matthew Daly contributed to this report.