IRS Withholding on US Tournament Winnings Starts in 2008 [Archive]

DeadMoneyDad

09-01-2007, 11:34 AM

[ QUOTE ]
i'm curious, why is this a bad thing?

[/ QUOTE ]

IMO if the PPA is going to support taxation of on-line poker through the use of lisencing fees, it should demand some common sense changes to gambling taxation in return. Why agree in one respect and perhaps hope to change the bad law later?

Most people don't understand how badly F'ed up current taxation of poker is!

I have no problem with withholdings, and I can see that any position of the PPA that sounds reasonible must agree to have provisions so that the Federal and State governements can get their greedy grubby hands on any taxes currently due them under existing law.

But IMO, the PPA should make it clear that existing tax laws on poker make it very easy to create a much higher tax than is justified. You can have a loosing year or even a break-even year and owe a ton of tax under existing laws.

IMO our position should be, we have no problem paying taxes on real income, but strongly oppose paying taxes on phantom income.

If we do not address this issue at the begining, when the tax revenue calculations on lisencing and tax collection are formed, we will be in the position later of facing the arguement that we are "costing the US government money" or creating "tax-breaks" for poker players.

Any deal on regulation, lisencing, etc, is the only time to correct this problem, you wait and it's too late as the projected revenue stream will be spent at least two times over.

D$D

TheEngineer

09-01-2007, 12:00 PM

[ QUOTE ]
[ QUOTE ]
i'm curious, why is this a bad thing?

[/ QUOTE ]

IMO if the PPA is going to support taxation of on-line poker through the use of lisencing fees, it should demand some common sense changes to gambling taxation in return. Why agree in one respect and perhaps hope to change the bad law later?

Most people don't understand how badly F'ed up current taxation of poker is!

I have no problem with withholdings, and I can see that any position of the PPA that sounds reasonible must agree to have provisions so that the Federal and State governements can get their greedy grubby hands on any taxes currently due them under existing law.

But IMO, the PPA should make it clear that existing tax laws on poker make it very easy to create a much higher tax than is justified. You can have a loosing year or even a break-even year and owe a ton of tax under existing laws.

IMO our position should be, we have no problem paying taxes on real income, but strongly oppose paying taxes on phantom income.

If we do not address this issue at the begining, when the tax revenue calculations on lisencing and tax collection are formed, we will be in the position later of facing the arguement that we are "costing the US government money" or creating "tax-breaks" for poker players.

Any deal on regulation, lisencing, etc, is the only time to correct this problem, you wait and it's too late as the projected revenue stream will be spent at least two times over.

D$D

[/ QUOTE ]

I hope you'll write to Congress and to the PPA to express that. It sounds like you'll make it clear that you wish to pay your taxes like everyone else, but that our taxes should be the same as everyone else's.

By the way, FoF has repeatedly tried to get the federal deduction for gambling losses eliminated, such that if you win $100,000 and lose $300,000, you may taxes on $100,000 in income. They say the deduction subsidizes an industry that "destroys America's families". /images/graemlins/confused.gif

DeadMoneyDad

09-01-2007, 12:28 PM

[ QUOTE ]

I hope you'll write to Congress and to the PPA to express that. It sounds like you'll make it clear that you wish to pay your taxes like everyone else, but that our taxes should be the same as everyone else's.

By the way, FoF has repeatedly tried to get the federal deduction for gambling losses eliminated, such that if you win $100,000 and lose $300,000, you may taxes on $100,000 in income. They say the deduction subsidizes an industry that "destroys America's families". /images/graemlins/confused.gif

[/ QUOTE ]

We are likely never to win over the "sin tax" crowd. Yes I have made this position clear to the PPA, and will continue to do so. This is an educational crusade for me. Most US players don't know how truely horrible the current tax laws are. Currently with no withholding and no reporting, the only risk US players face is undocumented income from on-line withdraws.

So the issue for me is to educate as many players as I can, and hope my voice is heard by the lobbing arm of the PPA. IMO if we plant the seed when discussing lisencing, taxation, and regulation by making it clear we have no problem paying our FAIR share, but no more, we have a good shot at dealing with the issue as a whole.

This would be further supported by any wins in the "skills" arguements. We would then liken our arguement to stock, real estate, and similar "speculation" (really a risk reward arguement). This would be a best case senario for us as a poker carve-out rather than an accross the board change in gambling taxation, IMO, is about all we have to hope for in the current political climate.

IMO we need to embrace gambling causes that don't put us too far in that crowd to reap the general rewards, like the KY race, but keep our independence enough to not loose to the fears of unrestricted gambling. It will be a hard road to stay on, but there is enough of a logical foundation for us to at least to attempt to try it.

D$D

Legislurker

09-01-2007, 04:08 PM

I would hope the AGA was on board as well. Money that goes to the IRS is beyond dead. But apparently they can't even get decent CTR laws/regs. God knows the two orgs should work together at some point.

TheEngineer

09-01-2007, 04:13 PM

John Pappas just sent me an email informing me that the PPA is committed to fighting this.

[ QUOTE ]
When I say fight, I mean attorneys, appeals and lawsuits. We have agreed to commit the money.

[/ QUOTE ]

PPA is heading in a new direction. New leadership and new digs....they still have to prove they'll do what they say, but I hope we'll all give them a chance and keep an open mind. After all, Pappas' transition period has been more productive than the past year was.

DeadMoneyDad

09-01-2007, 04:47 PM

[ QUOTE ]
John Pappas just sent me an email informing me that the PPA is committed to fighting this.

[ QUOTE ]
When I say fight, I mean attorneys, appeals and lawsuits. We have agreed to commit the money.

[/ QUOTE ]

PPA is heading in a new direction. New leadership and new digs....they still have to prove they'll do what they say, but I hope we'll all give them a chance and keep an open mind. After all, Pappas' transition period has been more productive than the past year was.

[/ QUOTE ]

Boy I sure hope they don't spend much money on this one!

Of the 30,000,000 million poker players in the US how many play in live events where the buy-in is more than $5,000.00???

You can discount almost all on-line sites. Other than what 3-4 major events a year affecting no more than 20,000 players all who would have to file returns in the US and who were not professional gamblers who does this help?

Professional gamblers have to file quarterly estimates, this actually helps them with their paperwork! Non-US players perhaps have to check a box that they are not affected by the law or have to file to get a refund.

If you are winning $5,000 events you already have to among the very few of the entire PPA membership for this law to affect you. Yes as a step for poker players it is a negative in general, but it is not a fight that concerns the majority of the membership, any more than getting easier tax write offs for corporate jets is for most businesses.

I would hope that the PPA doesn't go overboard on this one!!! Unless it is part of an overall tax strategy it's a looser. Public relations wise for the PPA it is even worse!

What any half decent grassroots political hack like me could do with just the retainer any lawyer is going to get could have much better ROI for the whole membership!!!

Boy I hope John will reconsider this one...........

D$D

TheEngineer

09-01-2007, 04:51 PM

Not $5K buy-in...$5K in winnings.

As for PPA, they need to start fighting back on tax issues, so this seems to be a good area for them to make the right connections and to show some strength.

TomVeil

09-01-2007, 04:59 PM

This is for winnings of 5K or more, not buy-ins. I'm not much of a MTT player myself, but it seems to me that it wouldn't be tough for a $20 or $30 tournament to pay out that much, especially with rebuys.........

DeadMoneyDad

09-01-2007, 05:26 PM

[ QUOTE ]
Not $5K buy-in...$5K in winnings.

As for PPA, they need to start fighting back on tax issues, so this seems to be a good area for them to make the right connections and to show some strength.

[/ QUOTE ]

O.K. a net of $5k.

Even still it is a looser.

What is our position? You can trust us to pay our own taxes? We don't like the paperwork? We don't like the idea of with-holding? The IRS is a money grubbing whore?

All might indeed be true, but in the light of the majority of poker players who only hope to someday win $5,000 in a tourney to be faced with such a "problem"??? All the IRS is going to do is with-hold the third tier of tax rates? Not the top! That I could see as worth an arguement.

More paperwork for organizers of poker events? So what most people would say.

It puts on the side of saying in effect we are going to fight against paying taxes under current tax law. No one likes paying taxes, but this disolves any future arguement that we are willing to pay fair taxes on winning from poker which is a winner.

Why back by the PPA's efforts a measure that affects a minority of the "membership", looks bad, and creates future problems? I'm sure the majority of paying members, pro players and the casionos B&M and on-line, want to see this fought tooth and nail. But spending a lot of money of this non-issue now is a major mistake, given the number of basic issues the majority of poker players the PPA hopes to represent really care about!

Now look at it from the perspective of a non-poker player! Winning poker players don't want to be subject to with-holding? Where is the hook?

It gets even worse from the perspective of those that oppose poker and gambling in general. Most people know that if you make a $10,000 transaction you create paperwork. Most people know that in a casino you get a W-2G. To fight this issue as the PPA is a big looser!

Let the casinos both live and on-line fight it if it's a problem for them. Pro players it's another piece of paper and a little more work for your accountant to add up. For the vast majority of the 30 million "average" poker players, we either will never be affected or hope we have to deal with as many of these damn pieces of paper, saying we netted more than $5,000 a tourney, we can get our hands on a year!!!!!!!

This is a PR nightmare waiting to happen,

D$D

Legislurker

09-01-2007, 05:45 PM

[ QUOTE ]
[ QUOTE ]
Not $5K buy-in...$5K in winnings.

As for PPA, they need to start fighting back on tax issues, so this seems to be a good area for them to make the right connections and to show some strength.

[/ QUOTE ]

O.K. a net of $5k.

Even still it is a looser.

What is our position? You can trust us to pay our own taxes? We don't like the paperwork? We don't like the idea of with-holding? The IRS is a money grubbing whore?

All might indeed be true, but in the light of the majority of poker players who only hope to someday win $5,000 in a tourney to be faced with such a "problem"??? All the IRS is going to do is with-hold the third tier of tax rates? Not the top! That I could see as worth an arguement.

More paperwork for organizers of poker events? So what most people would say.

It puts on the side of saying in effect we are going to fight against paying taxes under current tax law. No one likes paying taxes, but this disolves any future arguement that we are willing to pay fair taxes on winning from poker which is a winner.

Why back by the PPA's efforts a measure that affects a minority of the "membership", looks bad, and creates future problems? I'm sure the majority of paying members, pro players and the casionos B&M and on-line, want to see this fought tooth and nail. But spending a lot of money of this non-issue now is a major mistake, given the number of basic issues the majority of poker players the PPA hopes to represent really care about!

Now look at it from the perspective of a non-poker player! Winning poker players don't want to be subject to with-holding? Where is the hook?

It gets even worse from the perspective of those that oppose poker and gambling in general. Most people know that if you make a $10,000 transaction you create paperwork. Most people know that in a casino you get a W-2G. To fight this issue as the PPA is a big looser!

Let the casinos both live and on-line fight it if it's a problem for them. Pro players it's another piece of paper and a little more work for your accountant to add up. For the vast majority of the 30 million "average" poker players, we either will never be affected or hope we have to deal with as many of these damn pieces of paper, saying we netted more than $5,000 a tourney, we can get our hands on a year!!!!!!!

This is a PR nightmare waiting to happen,

D$D

[/ QUOTE ]

Yeah, taxes are not an issue to expend political capital on atm. But, the process would make almost no noise if put into effect in our favour. You know as a lobbyist, that when you ask for something, someone wants something back.
We have to get the internet back in poker for the recreational player, first and foremost. Though tax treatment would be an effective recruitment tool at next year's WSOP. Maybe we can democratically take over our own union and start doing things to benefit the poker community.

TomVeil

09-01-2007, 07:13 PM

I don't play MTTs myself, so I'm not sure how many players would make this. However, I see the following issue occuring in Vegas:

Pay $2,500 for tournament. Win 10K. Get 7,500. Now you're unable to play the main event.

Do you really think that you're gonna get that money back from the IRS after they have it?

TheEngineer

09-01-2007, 07:24 PM

Edited per request

Merkle

09-01-2007, 09:21 PM

John Pappas replied to this issue as follows:

Quote:
--------------------------------------------------------------------------------

I would also point out that this ruling, as I understand it, is based on the IRS opinion that poker is not a game of skill and should be taxed at the same rate of “wagering pools” like lotteries.

I think this is an issue that effects all poker players, not just high stakes pros. The PPA will dedicate the appropriate amount of time on this effort and will be sure that it does not slow us down on other fronts ...

--------------------------------------------------------------------------------
This was an issue I was concerned about at the beginning. Poker tourneys should be treated the same as Golf, chess, bridge, tennis etc...

TheEngineer

09-01-2007, 10:20 PM

[ QUOTE ]
Yeah, taxes are not an issue to expend political capital on atm. But, the process would make almost no noise if put into effect in our favour. You know as a lobbyist, that when you ask for something, someone wants something back.
We have to get the internet back in poker for the recreational player, first and foremost. Though tax treatment would be an effective recruitment tool at next year's WSOP. Maybe we can democratically take over our own union and start doing things to benefit the poker community.

[/ QUOTE ]

John Pappas replied to this issue as follows:

[ QUOTE ]
I would also point out that this ruling, as I understand it, is based on the IRS opinion that poker is not a game of skill and should be taxed at the same rate of “wagering pools” like lotteries.

I think this is an issue that effects all poker players, not just high stakes pros. The PPA will dedicate the appropriate amount of time on this effort and will be sure that it does not slow us down on other fronts ...

[/ QUOTE ]

It sound appropriate to me. If we're going to get the tax justice we want, long-term, we should start by fighting it being designated as a wagering pool.

Here's a post from www.taxabletalk.com/posts/1188594494.shtml (http://www.taxabletalk.com/posts/1188594494.shtml)

[ QUOTE ]
Poker Tournaments Takes a Hit
Back in 2005, I speculated that the IRS would write a regulation requiring withholding from poker tournaments. The IRS will, on Tuesday, announce Revenue Procedure 2007-57, requiring withholding from any winner of a poker tournament who has received more than $5000 in winnings from the tournament......

Posted by Russ on Friday August 31, 2007 at 2:08pm

[/ QUOTE ]

Tofu_boy

09-01-2007, 10:27 PM

So If I play 1k tourney today won 6k pay tax on those 5K.
Then tomorrow I play 5k tourney and lose.
Next day I play 2k tourney and won 7k pay tax those 5k (which is 1k) again.
Then next next day I play 5k and lose.
I suppose to break even on those 4 Tourney but now I'm -2k?

Tuff_Fish

09-01-2007, 11:38 PM

[ QUOTE ]
So If I play 1k tourney today won 6k pay tax on those 5K.
Then tomorrow I play 5k tourney and lose.
Next day I play 2k tourney and won 7k pay tax those 5k (which is 1k) again.
Then next next day I play 5k and lose.
I suppose to break even on those 4 Tourney but now I'm -2k?

[/ QUOTE ]

I don't follow your math.

I am assuming 20% withholding like a waitress or something.

You win 5k, you carry 4k out the door. next day you lose early, you carry nothing out the door and pay no taxes.

At the end of the year, you total up your losses and buyins, subtract from your total winnings and pay taxes on the difference.

What am I missing? Is this even an issue? If you go onto "Who Wants to be a Millionaire" and win $250,000, I can assure you you do not pocket the whole $250,000. Uncle gets his take right up front.

A lot of folks that are not on a regular salary get withholding taken out.

/images/graemlins/confused.gif

Tuff

DeadMoneyDad

09-02-2007, 12:27 AM

[ QUOTE ]

John Pappas replied to this issue as follows:

[ QUOTE ]
I would also point out that this ruling, as I understand it, is based on the IRS opinion that poker is not a game of skill and should be taxed at the same rate of “wagering pools” like lotteries.

I think this is an issue that effects all poker players, not just high stakes pros. The PPA will dedicate the appropriate amount of time on this effort and will be sure that it does not slow us down on other fronts ...

[/ QUOTE ]

It sound appropriate to me. If we're going to get the tax justice we want, long-term, we should start by fighting it being designated as a wagering pool.

Here's a post from www.taxabletalk.com/posts/1188594494.shtml (http://www.taxabletalk.com/posts/1188594494.shtml)

[/ QUOTE ]

This is a different issue from the one originally suggested, but still a tricky one to argue. You can make the skills game arguement to make your point about that point, but you loose over all.

The arguement in the past and the IRS battle has been how to get as much gambling income reported on W-2Gs. In the past "table games" have had an exemption based on the arguement that the casino didn't know how much a person cashing out really had at risk. You could cash out for $7,000, and no one knew if you started with $100 or $25,000 in chips.

But in a poker Tourney your amount at risk is known, it gets a little tricky for re-buy events a potential arguement, but in general the case law and precedence of previous decisions you end up at the same point -- withholding.

I'm sure poker was over looked for years because it is commonly thought of as a table game as it's played on a table, and for years the majority of poker was ring games. With the explosion of the popularity of tourney poker someone at the IRS figured they had to get their hands on Jamie Gold's winnings.

Sure all the IRS needs to do is contact Cynthia McGreevy to get her boss Blaise G. Dusenberry to do a little more homework and cite the correct laws statues or previous decisions.

Because this is a technical issue, IMO, we poker players and the PPA need to make sure we make it clear we have no problem paying a fair tax on winnings. Using this issue to further the "fairness" of only paying taxes on net winnings vs. gross winnings gives it a hook that might resonate enough to justify significant expense.

In the end with-holdings from tourney wins are here to stay, the questions is how do we use that for our best purposes in the future? Getting the IRS to cite the proper laws is important. But in the long run actually having more people experience paying taxes on phantom income {the win one tourney loose two and pay taxes on a loss situation} increaes our chances for the major fight win.

D$D

1p0kerboy

09-02-2007, 09:47 AM

[ QUOTE ]
What am I missing? Is this even an issue? If you go onto "Who Wants to be a Millionaire" and win $250,000, I can assure you you do not pocket the whole $250,000. Uncle gets his take right up front.

A lot of folks that are not on a regular salary get withholding taken out.

[/ QUOTE ]

The problem is that for professional poker player, when they hit a 'big score like $250,000' it's not all winnings.

Most of it has to cover the entries of tournaments where they didn't win anything. But if the IRS is keeping a big chunk of the bankroll, it's difficult to do so.

oldbookguy

09-02-2007, 10:05 AM

Posted in the "Was This To Be Expected" Thread as well with additions highlighted.

<Addition>
This is also in keeping with the online method used by all the ‘skill’ gaming sites.

On those, you deposit and with draw, redeposit and so on. If you hit big and the withdraw reached $600.00 BEFORE you can withdraw more, you must fill out the W2G form and taxes are withheld then on amounts above the $600.00 level.
<End Addition>

I have watched and read posts on this subject for sometime now.

The reality for business is the same for pro poker players.

Small business pays taxes by the quarter. If, when I was running mine I had a great quarter, I paid taxes on it. Later, if the next two were bad, I paid less.
At the year-end, taxes are then refigured on the total year, if I paid too much for that great quarter, I got it back.

Same in poker. Taxes are figured and paid per tournament / quarter.
At the year-end they are recalculated for the ENTIRE year, any over payment is refunded.

As a note, if a business ends up in the negative that is NOT carried over to the next year you start all over again at zero.

The ONLY difference is say I had OTHER income from stocks / bonds / rentals or whatever. IF my business lost money I could apply that loss to my other income.

With Poker / Gambling you cannot. Fair, no; the small business model is used by many to ‘lose’ some money to offset other income.

With that in mind, let me tell you, there are many ways to ‘lose’ money while actually making money.

obg

Tuff_Fish

09-02-2007, 12:54 PM

[ QUOTE ]

.
.
But if the IRS is keeping a big chunk of the bankroll, it's difficult to do so.

[/ QUOTE ]

I was under the impression they kept 20%. Does the amount vary? Anybody know?

Tuff

yahboohoo

09-02-2007, 01:13 PM

The PPA needs to pick its fights carefully. If they spread themselves out on too many issues, they won't be effective. And if the PPA is to survive (so that it can fight these kinds of tax issues), the first thing it needs to accomplish is the legalization of online poker. Nothing is more important, and anything else is just a distraction.

TripleNet

09-02-2007, 02:03 PM

Does anybody know how this would effect satellites?

Lets say you enter a $250 super satellite to the WSOP main event and win a $10,000 seat. Is there going to be withholding from that "tournament" to the tune of $2,500 leaving you only $7500 or enter the main event?

DeadMoneyDad

09-02-2007, 03:20 PM

[ QUOTE ]
Does anybody know how this would effect satellites?

Lets say you enter a $250 super satellite to the WSOP main event and win a $10,000 seat. Is there going to be withholding from that "tournament" to the tune of $2,500 leaving you only $7500 or enter the main event?

[/ QUOTE ]

Best question I've seen yet!

D$D

oldbookguy

09-02-2007, 03:26 PM

My guess, since that would be a 'prize' not unlike winning a car worth 10K, you would receive a 1099 form for 10K.

obg

DeadMoneyDad

09-02-2007, 03:30 PM

[ QUOTE ]

My guess, since that would be a 'prize' not unlike winning a car worth 10K, you would receive a 1099 form for 10K.

obg

[/ QUOTE ]

But unless the satellite was run by the main event sponsor, or the main event sponsor allowed 3rd party direct registration the prize is paid in cash.

D$D

TheEngineer

09-02-2007, 03:58 PM

[ QUOTE ]
The PPA needs to pick its fights carefully. If they spread themselves out on too many issues, they won't be effective. And if the PPA is to survive (so that it can fight these kinds of tax issues), the first thing it needs to accomplish is the legalization of online poker. Nothing is more important, and anything else is just a distraction.

[/ QUOTE ]

Part of that is establishing that poker is a game of skill, not luck. I think we have a need to be here getting poker seen as skillful by the IRS. If we win this argument, we'll be far better off.

jogsxyz

09-02-2007, 04:08 PM

[ QUOTE ]

Part of that is establishing that poker is a game of skill, not luck. I think we have a need to be here getting poker seen as skillful by the IRS. If we win this argument, we'll be far better off.

[/ QUOTE ]

That argument can't be won. No amount of proof will be
acceptable to the IRS.

jogsxyz

09-02-2007, 04:13 PM

Time for casinos to change the payoff schedule for tournaments
with prize pools under $50K. 1st place is $5K. 2nd to 9th
will win much more money. No need for deals on the final
table.

TheEngineer

09-02-2007, 04:44 PM

jogsxyz

09-02-2007, 05:00 PM

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]

Part of that is establishing that poker is a game of skill, not luck. I think we have a need to be here getting poker seen as skillful by the IRS. If we win this argument, we'll be far better off.

[/ QUOTE ]

That argument can't be won. No amount of proof will be
acceptable to the IRS.

[/ QUOTE ]

Okay. Let's just give up now.

Seriously, this is a new ruling, and we need to fight back on it. We don't "know" how the IRS will rule until we try, really.

[/ QUOTE ]

If you prove to the IRS that there is skill in poker,
you're going to make a lot of club prop players very
unhappy.
Many years ago the IRS had a group of agents playing
poker to determine how to tax club prop players. All
the agents lost. The IRS concluded that poker was
unbeatable. Saved prop players tons of money and
headaches with paperwork.

DeadMoneyDad

09-02-2007, 05:11 PM

[ QUOTE ]
[ QUOTE ]

Part of that is establishing that poker is a game of skill, not luck. I think we have a need to be here getting poker seen as skillful by the IRS. If we win this argument, we'll be far better off.

[/ QUOTE ]

That argument can't be won. No amount of proof will be
acceptable to the IRS.

[/ QUOTE ]

I think you miss the legal distinctions involved. It is not an arguement that poker is all skill and no luck. The skills game arguement is that there is a significant amount of skill involved and the outcome does not depend only on luck.

The reason for the PPA's involvement in this issue is the reg cites rules established for wagering pools and lotteries in adittion to the ones concerning gambling in general.

This does need to be challenged. IMO it will not required a very expensive effort. But IMO the end result will be the same, with-holdings from trouney wins.

Yes it is a technical legal arguement, and one that can be won, but it is not one that will cause the whole reg to fail. All it will take is for the IRS to modify the reg to cite the appropiate law (if such laws exist). Given the background of law on gambling winnings, and the existing laws and negociations with the casinos on table games reporting I assume such laws and regulatory background exists. I'm not a lawyer so I can't speak to this issue with complete confidence.

But in the end do not expect this rule to go away, nor should you critize the PPA when and if they win their legal distinction but with-holding become a reality.

Creating too big a buzz about this issue and anouncing that you might fight it tooth and nail, is part of the PR nighmare I've refered to in past posts.

D$D

DavidNB

09-02-2007, 06:13 PM

[ QUOTE ]
I don't play MTTs myself, so I'm not sure how many players would make this. However, I see the following issue occuring in Vegas:

Pay $2,500 for tournament. Win 10K. Get 7,500. Now you're unable to play the main event.

Do you really think that you're gonna get that money back from the IRS after they have it?

[/ QUOTE ]

Yes you would get it back at the end of the year, its a credit on taxes payable. It would all even out in the end.

TomVeil

09-02-2007, 06:18 PM

[ QUOTE ]
Yes you would get it back at the end of the year, its a credit on taxes payable. It would all even out in the end.

[/ QUOTE ]
I sure hope you're right /images/graemlins/wink.gif

TheEngineer

09-02-2007, 06:21 PM

[ QUOTE ]
[ QUOTE ]
Yes you would get it back at the end of the year, its a credit on taxes payable. It would all even out in the end.

[/ QUOTE ]
I sure hope you're right /images/graemlins/wink.gif

[/ QUOTE ]

Getting a refund on excess taxes is standard. Tax returns file the same whether taxes are owed or due to be refunded. The only difference is the underwithholding penalty. Still, we should not be treated like a lottery pool.

Coy_Roy

09-02-2007, 06:48 PM

[ QUOTE ]
the first thing it needs to accomplish is the legalization of online poker. Nothing is more important, and anything else is just a distraction.

[/ QUOTE ]

That's your opinion, I strongly disagree.

disjunction

09-02-2007, 07:43 PM

[ QUOTE ]
[ QUOTE ]
The PPA needs to pick its fights carefully. If they spread themselves out on too many issues, they won't be effective. And if the PPA is to survive (so that it can fight these kinds of tax issues), the first thing it needs to accomplish is the legalization of online poker. Nothing is more important, and anything else is just a distraction.

[/ QUOTE ]

Part of that is establishing that poker is a game of skill, not luck. I think we have a need to be here getting poker seen as skillful by the IRS. If we win this argument, we'll be far better off.

[/ QUOTE ]

This is actually a great issue to talk about. The examples that come up illustrate the fact that some poker players win.

jogsxyz

09-02-2007, 10:17 PM

Poker being skill or luck is a different issue.
Golf and tennis has withholding.
Doesn't the IRS withhold now? Yang didn't get
his $8M. This a about at what dollar amount
should the IRS start withholding.

ShadowBJ21

09-05-2007, 09:13 AM

As beeing not from the US I am curious how the tax return works for US residents.

Does this mean that even those who aren't professional poker players have to keep notes on all tournaments played and can deduct the buy-ins without ITM finishes from the whitholding? So if they can do so, what's about traveling costs etc.?

Thanks
Shadow

DeadMoneyDad

09-05-2007, 09:22 AM

[ QUOTE ]
As beeing not from the US I am curious how the tax return works for US residents.

Does this mean that even those who aren't professional poker players have to keep notes on all tournaments played and can deduct the buy-ins without ITM finishes from the whitholding? So if they can do so, what's about traveling costs etc.?

Thanks
Shadow

[/ QUOTE ]

For a non-professional gambler you can not deduct ofther expenses. You also can not "net" out your ITM vs. non-cash buy-ins. ITM cashes are net of the buy-in for that session. Each session is it's own event. All ITM cashes net of buy-in's are added to your gross income. All your buy-in where you didn't cash are added together and deductible up to the total of winnings but must be intemized. Even a break-even year yeilds a tax payment for most filers, in some cases a negative year can yeild a tax payment depending on your filing circumstances.

D$D

BBMW

09-05-2007, 11:39 AM

Harry Reid, the Senate majority leader, is the senior senator from Nevada. I'm pretty sure there are a hell of a lot of tournament poker players in Nevada. If he started hearing from a large number of them, it might prompt him to put some pressure on the IRS to squash this.

ShadowBJ21

09-05-2007, 02:55 PM

Thanks DeadMoneyDad!

So if I understand it correctly people don't have to pay more taxes due to the withholding. They just pay it at a different time then. At least those people that filed their tournament winnings correctly before.

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

DeadMoneyDad

09-05-2007, 05:51 PM

[ QUOTE ]
Thanks DeadMoneyDad!

So if I understand it correctly people don't have to pay more taxes due to the withholding. They just pay it at a different time then. At least those people that filed their tournament winnings correctly before.

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

[/ QUOTE ]

Yes that is pretty much it. The thought behind fighting this is an attempt to further the skills game arguement, because the reg is based on cites of wagering pools and other non-skill based gambling activities.

The interssting parctical effect is on satellittes. Under the current reg, if it holds up, a sponsor will either have to increase the prize amount to reflect the tax consequences. Thus steepening the payout structure, or they will have to make it clear that while you may win a seat you will be required to pony up the withholding to play in the main event.

How tourney operators are going to handle this matter I find quite interesting. Just wondering out loud but could an arguement be made that a satellite win to a main event was in effect a single session with any withholding done after the result of the main event. How this might fly with restrictions on third party registration bans that cause sponsors to offer prizes in cash instead of direct entry as well as on-line entry into major events, I don't know. But perhaps in this instance the interests of on-line and the B&M poker worlds just might interceede.

D$D

DeadMoneyDad

09-05-2007, 05:54 PM

[ QUOTE ]

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

[/ QUOTE ]

If a poker player was a tourney specialist I would guess an arguement could be made that he or she would no longer be required to file quarterly payments or be able to severly reduce them, as the majority of their income will now be withheld at the time of earning!

Lets see how the IRS likes that one!

D$D

BigAlK

09-05-2007, 06:04 PM

[ QUOTE ]
How tourney operators are going to handle this matter I find quite interesting. Just wondering out loud but could an arguement be made that a satellite win to a main event was in effect a single session with any withholding done after the result of the main event. How this might fly with restrictions on third party registration bans that cause sponsors to offer prizes in cash instead of direct entry as well as on-line entry into major events, I don't know. But perhaps in this instance the interests of on-line and the B&M poker worlds just might interceede.

[/ QUOTE ]

Except (at least in the case of the WSOP) the ban on third party registration only applies to on-line. I believe B&Ms can still do third party registrations. I'm not sure of the ins and outs of claiming a sat and the event you're entered into as a single session. I believe this is somewhat gray and might depend on whether you had the option of taking cash in lieu of entry or transfering the seat. If the seat is non-transferable and you don't receive anything of value except the entry (no lammers that can be sold on the open market instead of used for entry) then it probably does count as one session. It depends on constructive receipt (I think that's the term) and receiving something that can be converted to cash is possibly no different than receiving the actual cash. (This goes to the discussion, I think in this thread, about receiving casino chips instead of cash.)

MLSchaff

09-09-2007, 07:08 PM

[ QUOTE ]
[ QUOTE ]

Of course giving the IRS money (without interest) that can be partially returned after filing a tax report is a disadvantage in liquidity.

Shadow

[/ QUOTE ]

If a poker player was a tourney specialist I would guess an arguement could be made that he or she would no longer be required to file quarterly payments or be able to severly reduce them, as the majority of their income will now be withheld at the time of earning!

Lets see how the IRS likes that one!

D$D

[/ QUOTE ]

The IRS is completely fine with this. Estimated tax payments are required to avoid penalties for those taxpayers who are not subject to witholding. Under this new tax reg, tournament poker players will be subject to withholding. So if you have enough withheld from your tournament winnings to cover the estimated tax you would have to pay for that quarter, than you would not have to pay any additional estimated tax. And since tax payments are cumulative throughout the year, depending on your tax situation a major cash in the first quarter of the year from which 25% was withheld could be enough to cover your estimated taxes for the entire year. The problem is that you don't want to have more withheld than is required, so if you have another major cash you would be giving an interest free loan to the government, and then may get a refund when you file your taxes for the year.

If estimated taxes were not required, it would not be equitable to people on salary who are required to have taxes withheld from their paychecks. If no one had to pay estimates, salaried workers should be allowed to pay all their taxes at the end of the year as well.

The biggest issues I see are satellites and rebuy tournaments. In rebuy tournaments, the buy in amount is unknown for each individual player - so how is the net win for that tournament to be figured? For satellites, I think a reasonable argument could be made that a satellite win and the tournament for which entry is won are a single event. However, when sats are paid out with tournament entry chips that can be sold, you are actually receiving a negotiable instrument for the amount of the entry fee. If casinos were to instead register the player for the main event directly (obviously not possible online - lets stick with B&M here) and that registration was non-transferable, a solid argument could be made for no withholding on that amount based on constructive receipt. The sat winner never actually received his winnings in this case.

Jimbo

09-10-2007, 12:23 AM

[ QUOTE ]
The biggest issues I see are satellites and rebuy tournaments. In rebuy tournaments, the buy in amount is unknown for each individual player - so how is the net win for that tournament to be figured?

[/ QUOTE ]

Taxes are witheld from the gross win, not the net so it is irrelevant insofar as the tax witholding is concerned. As to figuring your year-end net I always get a receipt for my rebuys.

[ QUOTE ]
For satellites, I think a reasonable argument could be made that a satellite win and the tournament for which entry is won are a single event. However, when sats are paid out with tournament entry chips that can be sold, you are actually receiving a negotiable instrument for the amount of the entry fee. If casinos were to instead register the player for the main event directly (obviously not possible online - lets stick with B&M here) and that registration was non-transferable, a solid argument could be made for no withholding on that amount based on constructive receipt. The sat winner never actually received his winnings in this case.

[/ QUOTE ]

I disagree and am confident the IRS will as well. Suppose you win the sat and don't bother to show up to play in the tournament? Under your theory there would be no taxable income, do you really think the IRS would agree? Now a pro would not care one way or another since the net effect would be tax neutral but a "hobbyist" could have potential tax liability.

Jimbo

adanthar

09-10-2007, 01:44 AM

[ QUOTE ]
I disagree and am confident the IRS will as well. Suppose you win the sat and don't bother to show up to play in the tournament?

[/ QUOTE ]

What difference would it make whether you did or didn't play? Either way, you have a seat with your namecard next to it; whether you're in your seat, in the bathroom or 200 miles away makes no difference to the fact of your entry.

binions

09-18-2007, 02:27 PM

This ruling will severely hurt tournament poker.

Players with winnings early in the year will be less inclined to play more tournaments if they have already paid taxes on the winnings than if they can justify the next entry fee as, at worst, a write-off.

I understand that players will be able to file for refunds. But let's see how many audits there are when a gambler seeks $30K+ in refunds from the IRS for gambling losses that equal withholding. Let's see how closely the IRS will scrutinize your records of cash game losses in determining whether to pay a refund.

As noted above, the impications for satellites and rebuys is horrible.

And it is unclear to me whether the rule applies to American players in online tournaments. Arguably, it does.

It may drive some tournament donks back into cash games. That's about the only benefit I can see from the rule. But I expect the WSOP fields to be smaller as a result of the rule.

The folly of the rule, as it applies to pros who pay taxes quarterly, pay self-employment taxes, and net wins against losses and expenses, is that tournament winnings are not income. They are revenue. Every other business owner gets to net his expenses against his revenues, and pay taxes on the profit. Here, the revenues are getting taxed as de facto income.

canvasbck

09-18-2007, 03:42 PM

I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax (http://www.fairtax.org) . This seems like the perfect solution to the current unfair taxation to tournament poker players. A consumption tax will not tax winnnings that are returned to your bankroll for future entry fees, it will only tax that portion of the winnings that are spent. The PPA could avoid "stretching itself too thin" by just working with a grass roots movement that is already being noticed on the hill. An organization the size of the PPA working with an organization the size of the fair tax folks could carry some signifigant clout.

Legislurker

09-18-2007, 04:00 PM

To be fair, the PPA has done some lobbying on tax treatment. I can't tell you if it is falling on deaf, hostile ears or not. It will probably take legislation or a new administration.

DeadMoneyDad

09-18-2007, 04:28 PM

[ QUOTE ]
The PPA could avoid "stretching itself too thin" by just working with a grass roots movement that is already being noticed on the hill. An organization the size of the PPA working with an organization the size of the fair tax folks could carry some signifigant clout.

[/ QUOTE ]

There are all kind of potential alliances possible. The questions always is what kind of seat you have at the table and what you get in return. This is why I keep pushing for the PPA to show some muscle on it's own. IMPO we have to show a little strength to get the required return we need long term. These are classic risk reward decisions, how much do you give for what you get in return. I'll leave all of these to others. I have opinions of course, but this one is a little "above my paygrade" at least at the moment.......... /images/graemlins/shocked.gif

D$D

tarath

09-18-2007, 05:16 PM

As an aspiring economist (currently a PhD student) I have read a great deal about the fair tax and it would be such an incredibly good thing for the entire country as well as for poker players its really worth supporting regardless of its effect on poker players.

I really encourage everyone to read the wikipedia article on the fair tax and write your congressman if your convinced. Pretty much every study by an actual economist suggests that the fair tax would improve our economy so drastically its amazing.

omgwtf

09-18-2007, 05:23 PM

[ QUOTE ]
I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax (http://www.fairtax.org)

[/ QUOTE ]
The "Fair" tax would be a disaster.

Money is only made when money is spent. There are no exceptions.

The current system taxes most money at the end of the year (or quarter), when the net profit can be determined. No profit means no tax. This has the added benefit of creating an extra incentive for the government to help businesses succeed -- failing businesses generate no taxes.

The "fair" tax is profoundly unfair. When measured as a percentage of income, the "fair" tax results in the poorest people paying the highest percentage while the wealthiest pay the least. Businesses are taxed the same regardless of whether they are profitable or show a loss. Businesses that are profitable today, but only by a small margin, become unviable under the "fair" tax. The "fair" tax also removes money from the hands of spenders more quickly... meaning at any given time, the spenders have less spending money available.

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

D.L.M.

09-18-2007, 06:24 PM

This is such [censored] cause the guy who plays tourneys for a living and pays $500 a buy in 10 times then finally cashes for like 10k or whatever has to let the gov keep his money while he hopes and prays they give it back at the end of the year.

canvasbck

09-18-2007, 06:50 PM

[ QUOTE ]
[ QUOTE ]
I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax (http://www.fairtax.org)

[/ QUOTE ]

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[/ QUOTE ]

Apparenly you are under the mistaken impression that Americans (in general) don't spend every dollar which hits their pockets. A large majority spend every dollar they bring in (and then some), this will continue with the fair tax, the biggest difference is they will have more money to spend.

You said that the fair tax penalizes the poor. Do you really belive that the poor are able to utilize deductions that are available to the rich??? Ask how many folks in Harlem will be utilizing the new deduction this year for home security systems??

Also, the HB that is proposed as the fair tax would repeal the income tax amendment and end income taxes. A lofty goal but one which must happen for the fair tax to work. Please read more about it before condeming it.

The current system incourages people to hide income. And it happens a LOT. Do you think illegal aliens are currently paying a fair shar of the tax burden?? How about drug dealers? Strippers??? and a lot of cash poker players????

Legislurker

09-18-2007, 07:50 PM

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax (http://www.fairtax.org)

[/ QUOTE ]

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[/ QUOTE ]

Apparenly you are under the mistaken impression that Americans (in general) don't spend every dollar which hits their pockets. A large majority spend every dollar they bring in (and then some), this will continue with the fair tax, the biggest difference is they will have more money to spend.

You said that the fair tax penalizes the poor. Do you really belive that the poor are able to utilize deductions that are available to the rich??? Ask how many folks in Harlem will be utilizing the new deduction this year for home security systems??

Also, the HB that is proposed as the fair tax would repeal the income tax amendment and end income taxes. A lofty goal but one which must happen for the fair tax to work. Please read more about it before condeming it.

The current system incourages people to hide income. And it happens a LOT. Do you think illegal aliens are currently paying a fair shar of the tax burden?? How about drug dealers? Strippers??? and a lot of cash poker players????

[/ QUOTE ]

Everyone I know who makes between 100-500k/year pays taxes on less than 30k. And its apparently all aboveboard, or their lawyers and accountants have lied to them.

DavidNB

09-18-2007, 07:57 PM

[ QUOTE ]
This is such [censored] cause the guy who plays tourneys for a living and pays $500 a buy in 10 times then finally cashes for like 10k or whatever has to let the gov keep his money while he hopes and prays they give it back at the end of the year.

[/ QUOTE ]

The IRS just can't decide to keep money at the end of the year, it doesn't work like that. If you didn't have the income to pay that much in tax, you would get a refund.
It all works in the end.

Jimbo

09-19-2007, 01:38 AM

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax (http://www.fairtax.org)

[/ QUOTE ]

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[/ QUOTE ]

Apparenly you are under the mistaken impression that Americans (in general) don't spend every dollar which hits their pockets. A large majority spend every dollar they bring in (and then some), this will continue with the fair tax, the biggest difference is they will have more money to spend.

You said that the fair tax penalizes the poor. Do you really belive that the poor are able to utilize deductions that are available to the rich??? Ask how many folks in Harlem will be utilizing the new deduction this year for home security systems??

Also, the HB that is proposed as the fair tax would repeal the income tax amendment and end income taxes. A lofty goal but one which must happen for the fair tax to work. Please read more about it before condeming it.

The current system incourages people to hide income. And it happens a LOT. Do you think illegal aliens are currently paying a fair shar of the tax burden?? How about drug dealers? Strippers??? and a lot of cash poker players????

[/ QUOTE ]

Everyone I know who makes between 100-500k/year pays taxes on less than 30k. And its apparently all aboveboard, or their lawyers and accountants have lied to them.

[/ QUOTE ]

It is more liekly that everyone you know is lying to you than any other reasonable explanation.

Jimbo

Merkle

09-19-2007, 07:37 AM

Jimbo,

I agree with you in the earlier thread that comped rooms and meals are probably taxable. But here I disagree, There are so many legal ways to reduce taxable income if you have the funds to do so.

Legislurker

09-19-2007, 07:48 AM

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax (http://www.fairtax.org)

[/ QUOTE ]

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[/ QUOTE ]

Apparenly you are under the mistaken impression that Americans (in general) don't spend every dollar which hits their pockets. A large majority spend every dollar they bring in (and then some), this will continue with the fair tax, the biggest difference is they will have more money to spend.

You said that the fair tax penalizes the poor. Do you really belive that the poor are able to utilize deductions that are available to the rich??? Ask how many folks in Harlem will be utilizing the new deduction this year for home security systems??

Also, the HB that is proposed as the fair tax would repeal the income tax amendment and end income taxes. A lofty goal but one which must happen for the fair tax to work. Please read more about it before condeming it.

The current system incourages people to hide income. And it happens a LOT. Do you think illegal aliens are currently paying a fair shar of the tax burden?? How about drug dealers? Strippers??? and a lot of cash poker players????

[/ QUOTE ]

Everyone I know who makes between 100-500k/year pays taxes on less than 30k. And its apparently all aboveboard, or their lawyers and accountants have lied to them.

[/ QUOTE ]

It is more liekly that everyone you know is lying to you than any other reasonable explanation.

Jimbo

[/ QUOTE ]

I know the people they use as well. Most of them have commercial websites owned by a corporation offshore that buys everything they have from meals to cars or their home.
Whats left over is funneled to a trust. Anyone who doesn't work for a paycheck can do it.