IRS Withholding on US Tournament Winnings Starts in 2008

[adanthar]

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I disagree and am confident the IRS will as well. Suppose you win the sat and don't bother to show up to play in the tournament?

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What difference would it make whether you did or didn't play? Either way, you have a seat with your namecard next to it; whether you're in your seat, in the bathroom or 200 miles away makes no difference to the fact of your entry.

[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

[tarath]

As an aspiring economist (currently a PhD student) I have read a great deal about the fair tax and it would be such an incredibly good thing for the entire country as well as for poker players its really worth supporting regardless of its effect on poker players.

I really encourage everyone to read the wikipedia article on the fair tax and write your congressman if your convinced. Pretty much every study by an actual economist suggests that the fair tax would improve our economy so drastically its amazing.

[omgwtf]

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

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The "Fair" tax would be a disaster.

Money is only made when money is spent. There are no exceptions.

The current system taxes most money at the end of the year (or quarter), when the net profit can be determined. No profit means no tax. This has the added benefit of creating an extra incentive for the government to help businesses succeed -- failing businesses generate no taxes.

The "fair" tax is profoundly unfair. When measured as a percentage of income, the "fair" tax results in the poorest people paying the highest percentage while the wealthiest pay the least. Businesses are taxed the same regardless of whether they are profitable or show a loss. Businesses that are profitable today, but only by a small margin, become unviable under the "fair" tax. The "fair" tax also removes money from the hands of spenders more quickly... meaning at any given time, the spenders have less spending money available.

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[D.L.M.]

This is such [censored] cause the guy who plays tourneys for a living and pays $500 a buy in 10 times then finally cashes for like 10k or whatever has to let the gov keep his money while he hopes and prays they give it back at the end of the year.

[canvasbck]

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

[/ QUOTE ]

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[/ QUOTE ]

Apparenly you are under the mistaken impression that Americans (in general) don't spend every dollar which hits their pockets. A large majority spend every dollar they bring in (and then some), this will continue with the fair tax, the biggest difference is they will have more money to spend.

You said that the fair tax penalizes the poor. Do you really belive that the poor are able to utilize deductions that are available to the rich??? Ask how many folks in Harlem will be utilizing the new deduction this year for home security systems??

Also, the HB that is proposed as the fair tax would repeal the income tax amendment and end income taxes. A lofty goal but one which must happen for the fair tax to work. Please read more about it before condeming it.

The current system incourages people to hide income. And it happens a LOT. Do you think illegal aliens are currently paying a fair shar of the tax burden?? How about drug dealers? Strippers??? and a lot of cash poker players????

[Legislurker]

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

[/ QUOTE ]

The "fair" tax creates a strong incentive for people to hoard and save money instead of spending it. Remember that a dollar can only be made when someone else spends a dollar. Fewer dollars spent means fewer dollars to be earned by you and me.

In the context of poker the buy-in (or cash-out) would likely be considered spending, and incur the tax. It would be extremely naive to think that greedy politicians are going to leave poker money untaxed. Even proponents of a sales/use tax admit that one of the big dangers is that we wind up with a sales tax PLUS the current income tax.

[/ QUOTE ]

Apparenly you are under the mistaken impression that Americans (in general) don't spend every dollar which hits their pockets. A large majority spend every dollar they bring in (and then some), this will continue with the fair tax, the biggest difference is they will have more money to spend.

You said that the fair tax penalizes the poor. Do you really belive that the poor are able to utilize deductions that are available to the rich??? Ask how many folks in Harlem will be utilizing the new deduction this year for home security systems??

Also, the HB that is proposed as the fair tax would repeal the income tax amendment and end income taxes. A lofty goal but one which must happen for the fair tax to work. Please read more about it before condeming it.

The current system incourages people to hide income. And it happens a LOT. Do you think illegal aliens are currently paying a fair shar of the tax burden?? How about drug dealers? Strippers??? and a lot of cash poker players????

[/ QUOTE ]

Everyone I know who makes between 100-500k/year pays taxes on less than 30k. And its apparently all aboveboard, or their lawyers and accountants have lied to them.