The Greatest Conglomerate Ever With the American Lottery

8. There is no place in the world where there are no exceptions, right?

It seemed to be the same everywhere.

‘Grease’ seems to work.

This is America, where you can kill someone and get away with it if you hire an expensive lawyer.

Like OJ Simpson back in the day?

He was a murderer who killed his wife, but he got away with it because he had a team of criminal defense lawyers, aka the Dream Team.

Funnily enough, the civil court ruled the other way and Simpson lost, but that didn’t mean he couldn’t be retried.

That’s the Anglo-American legal system.

“So, you’re saying my identity won’t be revealed?”

“That’s right, the winner of this Powerball will forever be the only person outside of Clover Company.”

“That’s great. Thanks for your work.”

“You’re welcome. You just paid for my meal, and I’m expensive, hahahahaha!”

I’d have to ask him later just how expensive.

“One last thing: Surely it’s not a problem that I bought a lottery ticket in a foreign country through your site?”

“That’s not a problem at all, we’ve checked with the lottery and there are already cases.”

“There have been cases?”

I ask.

“Not in Korea, but two years ago, in 2013, an Iraqi won the first prize using an American-run offshore lotto purchase site in Iraq.”

“Oh, yeah, and how did he find the winnings without incident?”

“Sure! It wasn’t California, it was a Portland, Oregon-based fulfillment company, and the first prize was claimed without any problems, so you don’t have to worry about that anymore.”

“Oh, so that happened!”

Thank goodness, thank goodness.

The last of your lingering doubts are now gone.

You no longer have to worry about not being able to collect your winnings due to a proxy purchase.

The only thing left to worry about is the taxes, but that’s a matter of how much more or less you got paid.

“But why didn’t this come to light?”

“Oregon, unlike California, allows anonymous claiming of lottery winnings, so the details weren’t released to the media because the winner naturally requested anonymity. Also, the first prize wasn’t astronomical like this one, so it wasn’t a big deal.”

“Ho-ho, a state where you can remain anonymous, I’m jealous of that?”

“Oregon, on the other hand, has a hefty state tax on lottery tickets?”

“I don’t envy that at all.”

“…”

How about a place that has both?

“Now it’s my turn. As you already know, Mr. Kang is a foreigner whose nationality is South Korea, which means that he only pays a 30% federal tax in the U.S., which frees him from all tax issues in the U.S. Plus, the state of California doesn’t hit the lottery with state taxes, so there’s nothing to worry about.”

Eric Kim, a U.S. Certified Public Accountant, spoke up.

“Yes, I know,” he said.

“But the problem is Mr. Kang’s taxes in South Korea, because under the U.S.-South Korea double taxation agreement, he has to pay the difference between the income tax he pays in South Korea minus the tax he pays in the U.S.”

“That’s right.”

“So, how much income tax will Mr. Kang have to pay in South Korea on this Powerball first prize?”

“Is it subject to the 33% other income tax, like the Korean lottery, or is it subject to gross-up income?”

“You must have done some research, right?”

“The money at stake isn’t a penny or two, is it?”

“hahahahaha, yeah, it is, but it was commissioned and scrutinized by James Lee.”

“Who’s James Lee?”

“Oh, US Lotto CEO Manhoon Lee.”

Apparently, James Lee is Manhoon Lee’s English name.

“So?”

“In principle, in order to be subject to other income taxes like the Korean Lotto, the winnings must be lottery winnings under Article 2 of the Korean Lottery and Lottery Fund Act. So, in principle, the first prize winnings from the US Lotto must be combined with other domestic income under Article 3 of the Korean Income Tax Act to file a comprehensive income return. Then, of course, the top bracket of 500 million or more applies and you are subject to 40% income tax.”

“…”

Sound familiar?

Then why did I hire you, the expensive looking guy?

“The good news is that income from overseas lotteries is not subject to local taxes like residence tax.”

“hahahaha, does that mean I still have to file a comprehensive income tax return next May and get ripped off for over 100 billion won?”

Money is money, but I was annoyed because I felt like if I paid more than 100 billion won in personal income tax in Korea, my identity would be known somehow.

Every once in a while, there’s a ranking in the media about who pays the most personal income tax.

When that happens, my carefree rich life is over.

What’s the point of building a palatial mansion and hiring a bunch of bodyguards to protect it?

Most of my relatives, from my in-laws to my uncle, and many of the people I have even the slightest connection with, will only see me as money.

And if I got married and had children, I would be perceived for the rest of my life as a dirty lucky man who played the lotto and won.

I really wanted to avoid that.

“You really don’t want your identity to be known, do you?”

“You know? You know how tight-knit Korea is, and how much they’ll bow down in front of you and point fingers behind your back? In a way, the extra taxes you’ll have to pay to Korea are an afterthought – it’s the exposure of your identity that’s the problem.”

“Why don’t you just hear me out?”

“Okay, go ahead.”

I felt like it was the end of the game, but he insisted that I continue.

“Now, what I’m telling you is in principle, and it’s not 100% clear whether or not US lottery winnings will be included in your overall income tax.”

“But there’s precedent, isn’t there? The trident or the four-legged spear?”

“I heard that story, and I looked it up, and it’s not clear, either. It was a long time ago, and it’s a carder’s tale. Some say it was subject to miscellaneous income tax.”

“Really?”

“Yeah, so I informally reached out to a junior of mine at the IRS and asked what would happen.”

“Huh? Your accountant’s junior is at the IRS?”

Why is a Korean-American junior to the IRS?

“hahahaha, I’m also a Korean CPA. I went to Sinchon Yangseo University, passed the Korean CPA while I was in school, served as an accounting officer, passed the USCPA, and immigrated when I got the chance.”

“Ah! So, you were well versed in Korean tax law?”

“Yes. What did the junior say?”

“What did he say?”

“It seems that it is correct to apply it as a combined income tax! “

If it’s right, it’s right. What’s this about “seems to be right”?

“I’m not sure what you’re saying?”

“Yes, you’re right. Not being clear is the key.”

“Why?”

“Because the rules and precedent are ambiguous, which means it’s open to debate, which means we can’t give a definitive answer until there’s a definitive case, and it’s formally discussed.”

“Can you keep it simple? I mean, I don’t make my living off of taxes, right?”

“What I’m saying is that there’s a chance, albeit a small one, that if you get a good lawyer and fight it tooth and nail, it could be recognized as miscellaneous income tax.”

“Huh—.”

What the hell?

You’re just going to make more noise, aren’t you?

I felt like I was getting myself into trouble.

Maybe I should just give up.

“Phew! Okay, that’s it, no more noise. Is there any other way?”

“There is.”

“There is? Well, then why didn’t you tell me?”

“Because it’s my duty to tell you all the possibilities, right?”

I said.

“And the other way?”

“You can get a green card, which means you’ll pay the same taxes as a U.S. citizen, and you’ll be exempt from paying taxes to Korea.”

“No, at what age do you get a green card?”

“That’s for Mr. Jang to tell you.”

“Huh?”

What, are you trying to grease the wheels again?

“Uh-huh, there’s no place where people don’t have exceptions, right?”

What a strange start.

“Grease again?”

“Uh-huh! I’m not some kind of painter, what do you mean?”

“Then what?”

“First of all, if we decide to go the green card route, Mr. Kang will use an EB-5 visa.”

“EB-5?”

“Yes. It’s officially called the employment-based fifth preference category, and it was created in 1990 to stimulate the economy through job creation and foreign capital investment in the United States.”

“Huh?”

I ask, sounding familiar.

“The requirement is that you invest $500,000 or $1 million and hire U.S. citizens, but the $500,000 is really more like $1 million, because they’re looking for areas where the economy has really collapsed. You have to hire at least 10 people for two years after the investment, and if you do, they give you a 10-year visa. Along with the visa comes a green card, so it’s the easiest way to get a green card with money.”

“No, not just $1 million, you can invest $10 million, $100 million, but that’s not the point, isn’t it? You’re going to invest or do whatever you want with the winnings, but when you get the winnings, you don’t have a green card?”

“hahahahaha! Isn’t that when you need an expensive and competent lawyer like me?”

“…”

What? Isn’t the bottom line greased?

If not, then what?

“Coincidentally-very coincidentally-California Lieutenant Governor Gavin Newsom happens to be a friend of mine, and Governor Jerry Brown is a regular at my campaign fundraisers?”

“…”

He’s a man of many coincidences.

Plus, he was expensive, and he seemed to have a lot of connections.

“I already made a lucky break a few days ago, I have a foreigner who wants to invest 50 million dollars in California, is it possible to get a green card with super express?”

“When you say super-expedited, how long are you talking about?”

“Five days, I’m talking about five days.”

“Is that, is that possible?”

“You can’t look down on a governor in America. They’re like the president of the state, and if you’re in California, which is the largest state in the 50 states, the most populous and the most economically powerful, it’s just a phone call to the Department of Homeland Security, which is the parent organization of immigration, and that’s it. In fact, we’ve got five days.”

“Ah!”

The existence of expensive and competent lawyers in America.

It seemed almost omniscient.

“Besides, the economy is really bad in California right now. There was the whole subprime mortgage thing, but basically, the previous governor, the Terminator, did a bunch of reckless tax cuts that literally killed the California economy.”

“What do you mean, the Terminator?”

“I mean the previous governor, Arnold, Arnold Schwarzenegger!”

“Aha!”

“So, actually, $50 million is a pretty big deal, and it’s a pretty big deal for Gavin or Governor Jerry. Do you understand what I’m saying?”

“Yes, I understand.”

“So let me get this straight, once Mr. Kang gives me the okay, I’m off to the races. I’ll sign a simple investment agreement with Gavin, and we’ll have Mr. Kang’s green card no later than five days later, okay?”

“Yes, okay!”

“As soon as the green card is issued, James Lee of the Clover Company, the US Lotto company, and Mr. Kang will travel together to Sacramento, where the state lottery office is located, to inform the lottery that they are joint first prize winners. Of course, Mr. Kang will need to be briefly certified.”

“Right.”

“Then that’s it. James will sell the press on his own, and we’ll just have to wait five to seven weeks for the winnings to come in. Now, what do you want to do?”

Ask me what?

A nagging question?

But then Eric Kim, CPA, interrupted.

“Before you decide, you need to know one more thing. You should know that as a U.S. citizen or permanent resident, you won’t save much on taxes if you win the first prize, right?”

“What?”

“As a citizen or permanent resident, you’ll first have to withhold 25%, and then you’ll have to pay another 12% when you file your U.S. income tax return the following year, which is due April 15. That adds up to 37%, which isn’t that far off from South Korea’s 40%.”

“Huh, so the US rips you off a lot too?”

“It’s not the US, it’s the US that’s ruthless when it comes to taxes.”

I thought for a moment.

It doesn’t sound like much, but it’s a whopping 3% difference.

In terms of money, 3% of the lump sum of $1.524 billion is more than $45 million, and the final after-tax amount is $28.8 million, or $300 million.

Best of all, I can leave no trace in Korea.

So, would I lose anything by getting a green card in the US?

I couldn’t think of anything.

It’s a green card, not a change of nationality.

Isn’t a green card mandatory for those who fart in Korea?

Wouldn’t I be morally betraying my country?

It’s money that has nothing to do with Korea anyway.

“Great! Let’s go with permanent residency!”

“Okay!”