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. Last Updated: 07/27/2016

Olympic Heroes Get Their Gifts Tax-Free

The State Tax Service has given in to complaints from Russia's heroes at the Nagano Olympics and reduced the taxes they have to pay on their prize money.

Russian medalists including three-time Olympic champion, cross-country skier Larisa Lazutina, who was awarded a Hero of Russia medal by President Boris Yeltsin on Monday, have been freed from paying tax on bonuses they receive from the Russian Olympic Committee and other state organizations.

"Any bonuses paid to an athlete by the Russian Olympic Committee for his or her performances at the Olympic Games or any other major championships are listed in the law as prize money and therefore are tax free," Anna Kamardina, deputy department head of the tax service, said Wednesday.

The ruling marks a partial climbdown from the tax service's position last week, which was that, apart from prize money paid direct by the organizers of the Nagano Olympics, all bonuses from sponsors and Russian state organizations were subject to income tax at a rate of 35 percent.

The Russian Olympics Committee's bonuses amount to $100,000 for a gold medal with lesser amounts for silver and bronze.

Bonuses given by private sponsors is still taxable however. Among others, this will cover bonuses to army officers from Uneximbank which awarded $50,000, $30,000 and $20,000 respectively for gold, silver and bronze medals.

The State Tax Service's partial change of heart came after some heavy lobbying by top sports and government officials.

Vitaly Smirnov, president of the Russian Olympic Committee, told Olympic medal winners after the Kremlin ceremony Monday that the athletes will not have to pay tax on their earnings.

"You will keep all the money you're getting from the government and our olympic committee," he said. "The president was especially keen on following his promise to our champions and instructed his staff to keep a close eye on it."

Igor Shabdurasulov, head of the government's public relations department, also stated Tuesday that the tax service was forced to change the ruling after it was clarified that the prize money was coming from government sources.

"I was glad to learn after all that we'll get the full benefit from our prize money," Lazutina said Tuesday at special award ceremony by the Defense Ministry to army athletes.

"As an athlete you work so hard all year around, so it's nice to get a break once in a while," she said.

The 32-year-old skier would have been forced to pay tax of almost $350,000 on her $1 million in Olympic earnings.