IRS Withholding on US Tournament Winnings Starts in 2008

[TheEngineer]

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]

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]

[ 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]

[ 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]

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]

Edited per request

[Merkle]

John Pappas replied to this issue as follows:


Quote:
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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]

[ 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

[ 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]

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]

[ 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.

[img]/images/graemlins/confused.gif[/img]

Tuff