IRS Lowering Tax Reporting Threshold for Casino Winnings

In March IRS has announced that it’s considering change in casino reporting rules and currently, the public and industry have until the June 2nd to make opinions on their proposal. They also have an opportunity to appear at a hearing in Washington D.C. on June 17th before the final decision by Internal Revenue Service is made.

Currently the IRS requirements are that gamblers must report winning amounts of $1,200 or more. Depending on amount of winnings, players at casino receive one or two W2-G forms that are used for reporting income or withholdings related to gambling.

The IRS proposal which was released in March could reduce the tax reporting thresholds for casino customers from $1,200 to $600 for gambling winnings. When the proposal was first released, American Gaming Association expressed concerns, claiming that such change could cost the states millions of dollars.

Many agree that such change is certainly unnecessary as it only adds more paperwork to an overly regulated industry. However Internal Revenue Service claims that gamblers must be honest and report their winnings, adding that losses can be deducted if necessary records are provided showing the amount of both their winnings and losses.

It is expected that change will have an impact on casino business if this proposal passes because when someone hits the jackpot, the machine can’t be used until IRS form is filled out. That means that a number of times that slot machine is shut down will significantly increase which will, many believe, lead to decline in gambling revenue.

Gamblers will have to sit patiently and wait for an attendant to assist them with the paperwork. However it is believed that such change will also harm customer’s service experience.

The IRS announced that the public hearing will be held in Washington DC on June 17th after the public comments are made. IRS also requests comments from players who place bets on horse and dog racing as well as Jai Alai betting.

The Internal Revenue Service didn’t give any comments and it’s not required to answer questions about the proposal. However in March, when they proposed change in casino reporting rules, IRS said that modern technology certainly reduces the burden of reporting. They stated that reduction in the reporting thresholds will probably be considered in the future.

Legal advocates for gaming industry claim that if IRS’ move would bring more paperwork for gaming companies and that changes in the casino reporting rules are currently unnecessary.