zomg another taxes question

[poker1O1]

ok, so after reading up, here's what I've learned:
1. you must pay taxes on poker
2. rakeback too
3. pay your taxes
4. contact a CPA
5. you can file as recreational or pro, but can't switch back and forth
6. canada does not tax poker income
7. just pay your taxes

now for the question, or, scenario: let's say you live in the U.S. and play online poker. you have a friend that plays in canada. you transfer your online BR to him, he cashes out and gives you the money, in cash. what risks do each of you face? how realistic is it that the IRS will have access to these transfers in the future? flame away.

[PokeReader]

I would not count on this staying confidential. Why?

1. There is a computer the NSA is tapped into in Europe which tracks all electronic money movements in the world. Period. The U.S. government is using the info for non-terrorism prosecutions and investigations. I know it was used in the Neteller investigation.

2. All the sites have been conspriring in tax evasion. Under U.S. law they are obligated to send everyone cashing out over a certain amount a gaming tax form, and send a copy to the IRS. They have not been doing this. This is what Party is now negoitating about with DOJ. The settlement will no doubt involve giving the government player account information for those who might be owing taxes.

3. The existing U.S. facing sites are now arguably involved directly in some of the same conduct of Neteller, which amounts to money laundering in a technical sense. FT is now requiring that players' withdraw in amounts less than 10K, which is essentially forcing them to structure, which is illegal in itself if intentional, and will without fail draw the interest of the FBI to players that repeated cash in high under 10K amounts.

The most depressing thing is that some banks are refusing to process checks from Party. This means the banks can, and may agree to block payment from gaming payors via check. They probably won't agree to put it in the regs, but they will try to comply anyway. Just another darn problem cashing out.

We are currently benefiting from the current chaos and understaffing at the DOJ. I can only hope they will not be able to put a major case together against the existing sites before the next election, but I wouldn't bet against it. My greatest hope is that we will get a Democratic administration, and that though this law will not be repealed, it will edge into the same non-enforcement status as our immigration laws.

[Niediam]

1. Yep
2. Yep
3. Smart
4. Smart again
5. Not really. You either are a pro or you arn't. But soemtimes the line can be blurry. If you file one way and the IRS doesn't like it they will let you know.
6. Only if you are playing recreationally. There are taxes when you are playing for a living.
7. Seriously

I don't know what the risks are for your Canadian friend but for you it is jail time (obviously more likely based upon the more money you are talking about here). You are clearly trying to committ fraud here and can't run the 'I have to pay taxes on poker winnings?!?!?! Wow, I had no idea!' and expect a fine line.

Nobody knows how likely it is that the IRS will end up knowing what you have been doing but it wouldn't surprise me at all if something happen along the lines of Stars giving the IRS records for all it's American players over the past ten years when it applies for a licence to legally operate in the US in 2013 (hypothetical of course).

[driller]

Let's say it's 10000:1 that you get caught. Since it's fraud you are looking at jail time probably plus a lot of legal fees unless you just give up.

But its probably not too bad..you'll be in a white collar facility for 2-3 years. Probably won't get to play online, maybe for cigs with the other white collar criminals and also minimal risks of getting it up the ass in the shower. Oh yeah, the govt will want their money too (including fines and interest), plus unless you plan on just playing poker the rest of your life, prison time isn't too impressive on the ol' resume.

Really, its up to you.