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IRS Wants Winnings from National Poker Phenom
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Flip the channels and try not to find a poker-playing tournament. Ever the student of pop culture, the Internal Revenue Service now wants a room in that full house.
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By Darrin T.Mish
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Are you one of the lucky ones? Among the thousands of poker players bit by the pop-culture bug and now causing casinos around the country to increase the number of active tables on their floors?
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Then, I’m sorry to inform you, an unwanted player just sat down next to you: the Internal Revenue Service.
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Starting next year, the IRS will require casinos and other sponsors of poker tournaments to report most winnings to the government.
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The new requirement, which goes into effect March 4, 2008, was contained in guidance released Sept. 4 by the Treasury Department and the IRS. The guidance is designed to clear up confusion about the tax-reporting rules that apply to poker tournaments.
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In recent years, some casinos and players have been confused over whether poker tournament sponsors who hold the money for participants in a poker tournament are required to report the winnings to the IRS and withhold tax on the winnings.
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For tournaments completed during 2007 and before March 4, 2008, casinos and other sponsors of poker tournaments will not be required to report the winnings to the IRS or withhold tax on the winnings.
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That ends March 4. All tournament sponsors will be required to report winnings of more than $5,000, usually on an IRS Form W-2G.
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Tournament sponsors who comply with this reporting requirement will not need to withhold federal income tax at the end of a tournament. If any tournament sponsor does not report the tournament winnings, the IRS will enforce the reporting requirement and also require the sponsor to pay any tax that should have been withheld from the winner if the withholding requirement had been asserted. The withholding amount is normally 25 percent of any amounts that should have been reported.
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To ensure tournament sponsors can comply with this tax requirement, tournament winners will be required to provide a Social Security number to the tournament sponsor. If a winner fails to provide this, the tournament sponsor must withhold federal income tax at the rate of 28 percent.
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Of course, taxing gambling winnings is nothing new. In fact, taxpayers are required to report their winnings every year, even if they do not receive a tax form when they collect those winnings.
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In truth, not many people report their winnings — some because they don’t want to and others because they don’t know they need to report.
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This news should reinforce the absurdity for taxpayers of a long-held myth about the IRS: that the tax-collecting agency only pursues and audits the filthy rich.
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Average taxpayers, including middle-class folks just taking a vacation in Las Vegas, can become the target of IRS scrutiny.
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Consider that the next time you seat at the card table or file your taxes.
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Darrin T. Mish is a Nationally recognized Attorney whose practice focuses onrepresenting clients across the United States with IRS Problems.He is AV rated by Martindale-Hubbel and is a member of the American Society of IRS Problem Solvers and the Tax Freedom Institute. He has been honored by a listing in Martindale-Hubbel's Bar Register of Preeminent Lawyers. If you have an IRS Problem and need IRS help then contact him immediately. He can be reached at his website at http://www.getIRShelp.com or tollfree at (888) 438-6474.
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