[jackflashdrive]

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I live in Seattle. I play online poker daily. No individuals have been arrested or charged. In fact, I don't think anyone's been charged (except maybe that website reviewer, which was total BS). Our state legislature passed a rhetorical law to appease their Native Indian campaign donors.

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"The IRS has said that they regard online wagering to be a tax evasion scheme."

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Online poker = "a tax evasion scheme???" That makes no sense at all. A scheme is a ploy. In this case, it would mean someone invented online poker as a ruse devised to screw the tax man. Online poker might be rife with tax cheats, but to classify the whole industry as a "scheme?" Phhbbbt... That's like saying tipping in restaurants is a "tax evasion scheme."

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(1) My accountant is one of 4 or 5 in the country who specializes in gambling accountancy.

(2) He is an enrolled agent with the IRS and very down with their policies.

(3) The IRS has stated their belief in internal documents that a lot of people will use online gambling to evade taxes -- this is what is meant by tax evasion scheme (not necessarily that online poker was 'invented' for the purpose of evading taxes).

The upshot is that you will get a lot of scrutiny if the IRS determines you've made anything substantial from online gambling.