IRS Withholding on US Tournament Winnings Starts in 2008

[Siren]

Starting March 2008 the IRS will require casinos to take withholding from any net tournament winnings over $5000.

This is a link to an article about the old procedures, but there is a link in the upper right of the page to today's new rules.
http://www.gambling-law-us.com/Artic...-debunking.htm

Shirley
http://www.poker-babes.com/

[Coy_Roy]

Isn't this something that The PPA should be strongly crying out about?

Where are they?

[TheEngineer]

[ QUOTE ]
Isn't this something that The PPA should be strongly crying out about?

Where are they?

[/ QUOTE ]

They posted the article on their home page. They don't mention taking a position.

[orentha]

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

[DeadMoneyDad]

[ 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]

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

[binions]

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]

I don't understand why poker players haven't been supporting the national sales tax also known as the Fair Tax . 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]

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]

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


D$D