So who is filing as a pro for their 2006 taxes?

[MicroBob]

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I don't know anything about your tax system... but I doubt a hitman can pay taxes and write down he got it by killing people. Can you explain that a little more? In most countries in Europe if you got money, they come and ask you where did you get it? And if they find out the money is from criminal activities, you are screwed. They take all money not just the taxes. I really doubt that in USA is any different.

(Of course I know that playing poker is not problematic, but the point of my post is a something else.)

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I'll try to explain how I THINK the logic works.
I believe I am getting most of this correct even though I don't know all the details. If anyone wishes to correct or expand or clarify then please feel free.
Otherwise, I think we can assume that most of this is at least relatively close to correct for purposes of this discussion:

My understanding of how it works and how it probably came about:

The original constitution in the 5th amendment includes the right against self-incrimination.
You have the right to NOT incriminate yourself of a crime.


I guess it was later that the U.S. implemented the income-tax.
You HAVE to declare tax on your income.
You have no choice in this regardless of what that income-source may be.


okay, so somebody says, "No way. I want to involke my 5th amendment right against self-incrimination. Paying my taxes may incriminate me of something. Therefore, I have every right to not pay my taxes because it says so right there in the 5th amendment."


in order to FORCE people to pay their taxes on their income and not be able to get out of it by claiming that doing so could incriminate themselves, they had to enact language that nothing in the tax forms could be used for incrimination of any of the activities discovered therein.


Thus, you really CAN and HAVE TO pay taxes on income that is even an illegal activity.
Obviously if you are a professional hitman you would probably be wise to come up with some sort of creative way of describing your job. Because I just wouldn't trust the govt to see, "Professional Killer" and not go with that info and not go out and try to catch you in the act.


But with 'professional gambler' they just can't use it against you because it violates your constitutional rights.
Also note that it would be unrealistic to come after 20-million American internet-gamblers anyway but that's besides the point.


Yes, if your income source is from something illegal you really do have to pay taxes on it. And theoretically, if you listed your occupation as drug-dealer they could not use it against you.

[DJ Sensei]

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Pay taxes now? Hahahahahahahahaahahahahhaahahhh.

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Frist is going to retire and his pension needs to be funded somehow.

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This made me really really angry, probably more than anything else thats happened recently. God damn it.

[TimM]

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Yes, if your income source is from something illegal you really do have to pay taxes on it. And theoretically, if you listed your occupation as drug-dealer they could not use it against you.

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I remember reading things like this many times in the help files that came with Turbo Tax back when I used to use it. I've been trying to verify it, but I only found counter examples:

http://en.wikipedia.org/wiki/Fifth_A...s_Constitution

<font color="green">In some cases, individuals may be legally required to file reports that call for information that may be used against them in criminal cases. In United States v. Sullivan, 274 U.S. 259 (1927), a case involving the Federal income tax, the United States Supreme Court ruled that a taxpayer could not use the Fifth Amendment to refuse to file a required income tax return. The Court stated: "If the form of return provided called for answers that the defendant was privileged from making[,] he could have raised the objection in the return, but could not on that account refuse to make any return at all. We are not called on to decide what, if anything, he might have withheld."

In Garner v. United States, 424 U.S. 648 (1976) the defendant was convicted in connection with a conspiracy to "fix” sporting contests and to transmit illegal bets. During the trial the prosecutor introduced, as evidence, the taxpayer's Federal income tax returns for various years. In one return the taxpayer had showed his occupation to be “professional gambler.” In various returns the taxpayer had reported income from “gambling” or “wagering.” The prosecution used this to help contradict the taxpayer's argument that his involvement was innocent. The taxpayer tried unsuccessfully to keep the prosecutor from introducing the tax returns as evidence, arguing that since the taxpayer was legally required to report the illegal income on the returns, he was being compelled to be a witness against himself. The Supreme Court agreed that he was legally required to report the illegal income on the returns, but ruled that the privilege against self-incrimination still did not apply. The Court stated that "if a witness under compulsion to testify makes disclosures instead of claiming the privilege, the Government has not 'compelled' him to incriminate himself."

Sullivan and Garner are viewed by some legal scholars as standing, in tandem, for the proposition that on a required Federal income tax return a taxpayer would probably have to report the amount of the illegal income, but might validly claim the privilege by labeling the item "Fifth Amendment" (instead of "illegal gambling income," "illegal drug sales," etc.)"</font>

That said, it would be hard to hide the source of online poker income because of electronic transaction records, so "taking the fifth" as to the source of gambling income in this case seems useless.

The question is, whether before or after this new law is enacted, am I breaking any laws by playing online poker in a business-like manner as a skilled player with an expectation of winning? I still think not, at least in my state. The New York laws all seem to exclude those "acting as a player" when defining a person profiting from or advancing gambling activity.

<font color="green">
4. "Advance gambling activity" A person "advances gambling activity" when, acting other than as a player, he engages in conduct which materially aids any form of gambling activity. [etc]

5. "Profit from gambling activity." A person "profits from gambling activity" when, other than as a player, he accepts or receives money or other property pursuant to an agreement or understanding with any person whereby he participates or is to participate in the proceeds of gambling activity.
</font>

http://www.gambling-law-us.com/State-Laws/New-York/

[climber]

Nice post TimM

Solid research--thanks a lot!

[PartySNGer]

Be sure to also report the fair market value of any items you stole.

[climber]

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Be sure to also report the fair market value of any items you stole.

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????

[SkandarAkbar]

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Question and Thoughts

Question: I did not claim poker income on the last few years on my taxes. I have cashed in 3 events this year, including a 57K cash at the WSOP. I was W2'd for that and an event at Caeser's earlier in the year. You can now view my other cashes online under my player profile. Should I claim this as well even though they were not W2'd? Also, is it more likely that this would be caught and audited if I claim the other cashes? Should I claim my online winnings now too for fear that that is also more likely to be noticed? Unfortunately, I have taken a lot of $8500, $9500, $7800, etc witdraws online recently because of the power hungry, Evangelistic, wanting to control our morals, US Gov't bill recently passed. This would definitely show up on my bank records. I make pretty good money outside of poker, so the deposits are not unusual for my income.

Thoughts:

All major pro's claim their earnings and some of that is online money. Do you ever hear of them getting in trouble by the US Gov't? You have no worries about claiming online winnings and getting in trouble for playing online by the Gov't.

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MANY pros after claiming 2-3 years as a pro gambler get audited. I believe Greenstein talked about this in his book.

[Pro666]

[img]/images/graemlins/grin.gif[/img] As Americans, it is our duty to pay taxes after the mess we poker players created. Our taxes go to stop the war against terrorism. If it wasn't for Mr. Frist, I would not have known that part of our rake goes to AL QaEDA. After all, where do you think Osama's been all these years. He's not only taking the rake, he's a badass owner/player like Teddy KGB, with a TAG game. That's right, he's been 12 tabling in that cave with that wicked broadband connection.

And just in time too, b/c a few more cents from the .01/.02 NL game on Prima (or any other site) and they could have bought another nuclear missle.

Thank you Mr. Frist. The world is a safer place now that you've stopped gambling forever.