25% Withholding Tax - Nixed

[xmykro 0]

25% Withholding Tax Proposal on Poker Tournament Winnings Nixed - PokernewsOctober 10, 2007John Caldwell and Haley HintzeTo the relief of many pro poker players who frequent the tournament circuit, a proposed Internal Revenue Service rule to withhold 25% of tournament winnings of over $5,000 (a net figure also taking entry and buy-in fees into consideration), will not see the light of the day.According to Wally Chalmers, Vice President of the American Gaming Association, a powerful group that works on behalf of land-based casino interests, the 25%-withholding idea was abandoned after an assessment of the rule's viability and negotiations with the IRS's rules-making group. The AGA's Tax and Finance Task Force played an important role in lobbying against the proposal, which would have both significantly increasedPokernews Cup Australia 2007casinos' reporting burden and reduced the liquidity of tourney pros as they move from one event to the next. Such loss of liquidity would have had a negative impact on some players' ability to secure entry fees to a given event, and over the long term threatened to reduce the number of players able to regularly finance their way into high-buyin U.S.-based events...........More in LINK----Finally some good news on the poker front.

[ThePhoenix88 0]

Thank God.

[chgocubs99 0]

Thank God.

[savagerebel 0]

That is a relief for me since my biggest live cash is -$20

[Fluffdog87 2]

v good news!

[Balloon guy 158]

I dream of a 25% tax rate/end brag I guess

[NoSup4U 0]

I dream of a 25% tax rate/end brag I guess

[a__thekevlar__2 0]

I dream of a 25% tax rate/end brag I guess

qft, do you know how many more pairs of shoes I could buy?!?!?!

[PrtyPSux 0]

if this ever went down tourney poker would be done in the US. I was talking about it yesterday w/ a bunch of tourney players, they all pretty much said they'd just stop playing in the states and come to europe.

[Pot Odds RAC 23]

if this ever went down tourney poker would be done in the US. I was talking about it yesterday w/ a bunch of tourney players, they all pretty much said they'd just stop playing in the states and come to europe.

Sure they would.Don't most B&M Casinos make you fill out tax forms and withhold for any large cashes? I know Caesars Vegas does for Canadians - and I think they do for anyone on large jackpots. For example, I know they do for any slot jackpot over some defined dollar amount - and it isn't the same as the $10,000 federal cash transaction limit, this is a much lower threshold for taxes - I believe that the dollar limit was $8,000 that required a tax formI also know that at the Detroit Greektown casino if you hit the bad beat jackpot, they immediately withold your tax.UPDATEFound a reference.http://www.casinogaming.com/tutorials/tablegames/"...if you hit a substantial slot jackpot. The IRS requires a W2G form to be filled out on all jackpots of $1,200 or more, so the casino will ask you for two forms of identification, usually a driver's license and social security card. Non-resident aliens are subject to a withholding tax of 30 percent to be deducted from the jackpot before payment."So the limit is $1,200 to require a W2G Tax Form and they automatically take 30% for any "Aliens"Additional info here:http://www.casinogaming.com/features/taxlaws.html

[Sculthorpe 0]

Can someone explain this to me? If this had passed, would that have been the only tax on the winnings? Isn't that typically less than the normal withholdings? Was this going to be put in place for those that did not report their winnings?

[NoSup4U 0]

Can someone explain this to me? If this had passed, would that have been the only tax on the winnings? Isn't that typically less than the normal withholdings? Was this going to be put in place for those that did not report their winnings?

Currently if you cash for more than $1200 or whatever the set amount is in a tourney, you have to fill out a tax form and the casino reports this to the government. They take out no money, and when you do your taxes in April you report this cash as income and pay taxes accordingly at whatever tax rate you are at. This is how its always been.What this new law was going to do was make it so the casino was required to take 25% of your winnings up front for taxes. (Basically a way for the government to get their money faster from you). Then when you do your taxes in April, you either get a refund for some of it if your tax rate is less than 25%, or pay some more on it if your tax rate is over 25%.Its not like this changes how much or if at all, you have to pay taxes. It just changes WHEN the govt takes their money, and for daily tourney grinders, this is a somewhat big deal.Mark

[Pot Odds RAC 23]

Currently if you cash for more than $1200 or whatever the set amount is in a tourney, you have to fill out a tax form and the casino reports this to the government. They take out no money, and when you do your taxes in April you report this cash as income and pay taxes accordingly at whatever tax rate you are at. This is how its always been.What this new law was going to do was make it so the casino was required to take 25% of your winnings up front for taxes. (Basically a way for the government to get their money faster from you). Then when you do your taxes in April, you either get a refund for some of it if your tax rate is less than 25%, or pay some more on it if your tax rate is over 25%.Its not like this changes how much or if at all, you have to pay taxes. It just changes WHEN the govt takes their money, and for daily tourney grinders, this is a somewhat big deal.Mark

One more thing in addition to getting their $ faster, and perhaps one of the more important considerations as a motivation to enact such legislation.I'd venture a guess that given the cash nature of Poker very little of the income is ever reported to the IRS - especially by daily grinders. This is a reasonably large hole in their ability to collect on tax revenue. Grabbing the 25% at the point of impact for Tourney cashes would ensure the IRS of geting some portion of the dollars owed.

[NoSup4U 0]

One more thing in addition to getting their $ faster, and perhaps one of the more important considerations as a motivation to enact such legislation.I'd venture a guess that given the cash nature of Poker very little of the income is ever reported to the IRS - especially by daily grinders. This is a reasonably large hole in their ability to collect on tax revenue. Grabbing the 25% at the point of impact for Tourney cashes would ensure the IRS of geting some portion of the dollars owed.

They get that money anyway. The casino won't pay out your tourney cash until you fill out the proper IRS forms, show ID, etc. This law doesn't get the government any more money, it just gets it to them right away. Mark

[Pot Odds RAC 23]

They get that money anyway. The casino won't pay out your tourney cash until you fill out the proper IRS forms, show ID, etc. This law doesn't get the government any more money, it just gets it to them right away. Mark

Good point.

[Sculthorpe 0]

Currently if you cash for more than $1200 or whatever the set amount is in a tourney, you have to fill out a tax form and the casino reports this to the government. They take out no money, and when you do your taxes in April you report this cash as income and pay taxes accordingly at whatever tax rate you are at. This is how its always been.What this new law was going to do was make it so the casino was required to take 25% of your winnings up front for taxes. (Basically a way for the government to get their money faster from you). Then when you do your taxes in April, you either get a refund for some of it if your tax rate is less than 25%, or pay some more on it if your tax rate is over 25%.Its not like this changes how much or if at all, you have to pay taxes. It just changes WHEN the govt takes their money, and for daily tourney grinders, this is a somewhat big deal.Mark

Thanks, that makes sense.