Don't Blame the IRS

The IRS, Joe Louis, and the charity fights of 1942

Before commencing it is proper to note that Joe Louis' tax dilemma started long before the (now) infamous 'charity' fights of 1942; Louis was not the innocent he is often painted as, he had not been making good on his tax burden as early as the Braddock fight and by 1942 was already in a deep tax hole.

The argument here: the real culprit stopping Joe Louis from gaining tax relief from his 1942 donations wasn't the US government (IRS), but instead was the actions of Uncle Mike Jacobs (promoter) and Johnny Roxborough (manager). The government was trying to work with Louis; Uncle Mike and Roxborough weren't trying to work with the government.

About the charity fights:

Joe Louis donated his entire battle money (purse) from his 9 January 1942 title defense against Buddy Bear to the Navy Relief Fund, and then on 27 March 1942 in a title defense against Abe Simon, while in uniform, Louis once again donated his entire battle money (purse), this time to the Army Emergency Relief Organization.

But there lies the rub; he donated his 'purse.'

In January of '42 trying to find some tax relief for Louis, with Louis' induction eminent, manager Johnny Roxborough reached an agreement with a War Department representative, Thurman Gibson. (It was in the best interest of both parties if Louis was to enter the military tax debt free.) The plan was for Joe Louis to fight two title defenses, with Joe Louis, his manager Johnny Roxborough, and his promoter Uncle Mike Jacobs ALL donating their earnings to the NRF and the AERO respectfully. The fights were to be 'charity events.' Had this occurred the agreement with the IRS would have been fulfilled and Louis would have been relieved of much of his tax debt. Louis would have gotten credit for all of the donations.

But, neither Roxborough nor Jacobs came through with their donations, (both took a profit from the fights) and worst yet Jacobs (for his own tax benefit) paid Louis a 'purse.' This meant, while Louis' donations did count toward paying off his outstanding tax debt as agreed, the IRS now (rightfully) claimed Louis was subject to new taxes on the money he had just earned.

The IRS didn't see the fights as charity events, (and probably felt like Uncle Mike had played them). The IRS claimed Louis' purse was taxable income; under these conditions, fighting in a for-profit prize fight, Louis should have paid his taxes first and then donated what remained.  Whether the IRS was being unreasonable or not, is open to debate, but it wasn't the IRS who broke the deal.

Louis got blind sided, not by the IRS, but by his manager Johnny Roxborough (a former bookmaker) and Uncle Mike Jacobs, his promoter.

Yet even after these back-to-back fiascos, amazingly the War Department and the IRS were still willing to try to rectify the matter and tried to work with the heavyweight champion one more time.

In the late summer of 1942 the War Department (Thurman Gibson again) proposed to Louis' people one last shot at a 'charity fight,' the much anticipated Louis-Conn rematch. This time Mike Jacobs would be publicly committed to staging a 'charity' event, with ALL the gate receipts going to a war relief fund. With an anticipated million dollar gate, both Louis and Conn would be relieved of their tax burdens. (Conn was signed with Jacobs, Conn also had tax problems, no surprise there.)

The contract was officially signed on September 22nd and the fight set for October 12th, 1942. Everyone was in (almost).

Just a day or two after the contract was signed it was leaked to the press that both Louis' and Conn's contracts contained clauses where some gate receipts would be used to pay off private debts (as well as tax debts.) Jacobs and Roxborough were at it again, the two recipients of the private debt pay offs were none other than Mike Jacobs and John Roxborough. They attempted to divert $136,000 from the charity fund into their own pockets. Furthermore it then surfaced that Jacobs had held back 200 of the most expensive ringside seats as well, claiming he needed them for comps.

It became a media shit storm culminating with Southern Senators taking to the floor of the US Senate and asking: 'Why, with American boys dying at Guadalcanal was the War Department working so hard to bring tax relief to one wealthy individual?' (Louis' name was never mentioned but everyone knew who was at issue.)

With the press and the 'blue dawg' Southern Senators clipping at his heels Secretary of War Stimson folded, the fight was canceled. Stg. Louis and Cpl. Conn where placed on active duty and the gate receipts returned.

Louis wouldn't be able to fight for money again until '45 and with the high tax rates of 1945 and 1946 eating up the last few paydays he had, he was never be able to get himself out of tax debt.

It was all there for the taking, all Mike Jacobs and Johnny Roxborough had to do was not steal and Joe Louis would have had his tax debt erased. Don't blame the IRS, blame Jacobs and Roxborough.

Oh! and we would have gotten Louis-Conn II when we should have, in 1942.