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I could forsee a stop being placed until Neteller is capable of issuing a 1099 for tax purposes for each individual US account holder.

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I don't see how that is possible as NT has no idea how much people have made. They only know how much people moved through their system. People often cash out or buy in via a different method then NT. Even if we move past that, most of the money in the gamboling economy is in sites ATM not in NT. Therefore any information they have is incomplete unless that money were to go back through their system.

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What you say is partially correct, but they can give a total for the amount in each account from a specific date forward (i,e. 2/1/2007) This can then be the base amount for a 1099 to be issued. It would then be up to each tax payer to come up with records in order to show losses and gains.

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But the 1099 would be wrong. In addition to the other things I mentioned. It's possible the money has already been taxed. Simply having money in NT seems relatively unrelated to whether that money is taxable winnings. Just issuing a 1099 with the amount of money in the account would create all kinds of headaches for everyone not just costumers. For example the 100 bucks I have in there came from a P2P transfer unrelated to poker. Lot's of people likely have money in there from having just loading their accounts. I doubt the IRS wants to go through tens of thousands of people's explanations to why a few K isn't taxable. This whole scenario just seems very unlikely. I could see the DOJ requesting info on people that had a large amount of money on there to make sure they are clean on the tax front, but having NT issue tax forms to everyone just makes a confusing mess that I can't see why they'd want to deal with.

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Or the DOJ may simply seize all funds similar to what they do in drug cases. I'm sure they (the US gov) would love to do this if they could and currently have their lawyers exploring all options.

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Well that money isn't in the US I think. So that will pose some challenges in that direction. It's possible they could overcome that. Seems like pretty bad PR though. It's one thing to go after big bad cooperations that enable vise. It's another to take patrons money. After all, they're trying to "protect" us poor souls. There's also the issue that it's very questionable in most parts of the US whether playing poker on the internet is illegal for the patrons. There certainly have been no prosecutions much less convictions for such activities. Anything is, of course, possible though.