Without seeing all of the advertising materials, any disclaimers, etc. that
might have been used by the promotors or signed by yourself, I can't address
any "false advertising" claims that might exist.
That said, it is not unusual in the United States for advertised prizes to
be subject to withholding potential tax without prior notification, that is,
the prize that is advertised is the gross winnings and not the net winnings.
For instance, if you win a big payout at a casino in the United States, they
are going to withhold potential taxes that might be owed on the total
amount.
In your case, the organizers were required, outside some complicated
process,
to withhold 30% of your winnings. This is covered under Section 1441 of the
United States Internal Revenue Tax (IRS) code. The "Intltaxlaw.com" web
site
details this section of the IRS code.
"Section 1441. Withholding of Tax on Nonresident Aliens"
http://www.intltaxlaw.com/inbound/withhold/irc.htm#Section%201441
"... all persons, in whatever capacity acting ... having the ... payment of
any of the items of income ... of any nonresident alien individual ... shall
.... deduct and withhold from such items a tax equal to 30 percent thereof
...."
This is reiterated on this IRS web page.
"Artists and Athletes (Income Code 20)"
http://www.irs.gov/businesses/small/international/article/0,,id=106190,00.html
"You must withhold tax at a 30% rate on payments to artists and athletes for
services performed as independent contractors."
Are you out the 30% that they withheld? It appears that you can file a tax
return and as the amount paid to you is under the exemption allowed ($3,100)
you should be able to a file a "Form 1040NR" and get the balance as a tax
refund. The instructions and the form can be found on the IRS web site.
Note these are the forms for 2004, so if you won the race in 2005, you will
have to wait until the 2005 forms are available before you can file them.
"Instructions for Form 1040NR - U.S. Nonresident Alien Income Tax Return"
http://www.irs.gov/pub/irs-pdf/i1040nr.pdf
"For tax purposes, an alien is an individual who is not a U.S. citizen.
Aliens are classified as nonresident aliens and resident aliens. This
publication will help you determine your status and give you information
you will need to file your U.S. tax return."
Here is the form. "Form 1040NR - U.S. Nonresident Alien Income Tax Return"
http://www.irs.gov/pub/irs-pdf/f1040nr.pdf
This next part is beyond the scope of the question, but you might be able
to avoid some or all of this problem in future events. You might be able
to file a Form W-8BEN with the promotor in advance of a race.
"Certificate of Foreign Status of Beneficial Owner for United States Tax
Withholding"
W-8BEN Instructions - http://www.irs.gov/pub/irs-pdf/iw8ben.pdf
W-8BEN Form - http://www.irs.gov/pub/irs-pdf/fw8ben.pdf
If you need any clarification, please feel free to ask.
Denco
