The American Gaming Association has been beating a drum for all to hear since it was announced in early March that the IRS is considering a change to casino reporting rules. Rather than raising the reporting threshold set in 1977 to account for inflation, they may cut it in half.
Currently, online players must report winning amounts of $1,200 or more. When playing at video lottery terminals (VLT) true odds video poker, slots at racetrack venues, bingo, or Indian casinos the venue is responsible for making sure you fill out the proper form, W2-G. Keno winnings of $1,500 or more must also be reported.
The proposed rule change would reset that amount to $600 for winnings from keno, bingo, or slot machines. Any minor jackpot win would force a machine lockdown and players would need to sit patiently and wait for an attendant to assist them with the required paperwork.
The public and industry have until June 2 to make their opinions on the matter known, or appear at a hearing in Washington D.C. on June 17th, before the final decision is handled internally by the tax agency.
Some critics of the idea have questioned why the level isn’t being adjusted to 2015 dollars, which would reset the amount to nearly $4,700. The IRS has not commented publicly and is not currently required to answer questions on the matter. However in the Filing Requirements section of the proposed rules change it is claimed that modern technology sufficiently reduces the reporting burden and further reductions in the reporting threshold may be considered in the future.
Further arguments against the measure include a possible reduction in state revenues resulting from lost play time and tying up customer service personnel as well as administrative resources at casinos. Critics say that it may harm the customer service experience as well.
After public comments are received the IRS will hold a public hearing on June 17 in Washington D.C.
In the Explanation of Provisions for the proposed rule change it is stated that the envisioned requirements may make reporting easier by electronically tracking player wagering via players club cards. Backup withholding and electronic tax return filings are also mentioned.
Keno players would be able to deduct the amount wagered on the winning game before reporting a “profit” of $600. Slot and bingo players would not have that option. The rule change would not apply to mechanical slot machines, only electronic games. Mechanical slot players would still have a hand-pay threshold of $1,200.
The Filing Requirements state, “Comments are specifically requested regarding the proposed reporting thresholds, including the feasibility of reducing those thresholds to $600 at a future time, whether electronically tracked slot machine play should have a separate reporting threshold, and whether the amounts should be uniform for bingo, keno, and slot machine play.”
The IRS is also requesting comments from gamblers with winnings other than bingo, keno and slot machine play such as horse and dog racing and Jai Alai betting, especially in regard to concerns over combined wagers being used to offset winnings.
Those wishing to comment may send submissions to: CC:PA: LPD:PR (REG-132253-11), Room 5205, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-132253-11), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-132253-11). The public hearing will be held in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC.
Those wishing to attend the hearing on June 17 at 10am in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC. will need to enter at the Constitution Avenue entrance and present photo ID.