IRS Withholding on US Tournament Winnings Starts in 2008

[DeadMoneyDad]

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John Pappas replied to this issue as follows:

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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 ...

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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



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This is a different issue from the one originally suggested, but still a tricky one to argue. You can make the skills game arguement to make your point about that point, but you loose over all.

The arguement in the past and the IRS battle has been how to get as much gambling income reported on W-2Gs. In the past "table games" have had an exemption based on the arguement that the casino didn't know how much a person cashing out really had at risk. You could cash out for $7,000, and no one knew if you started with $100 or $25,000 in chips.

But in a poker Tourney your amount at risk is known, it gets a little tricky for re-buy events a potential arguement, but in general the case law and precedence of previous decisions you end up at the same point -- withholding.

I'm sure poker was over looked for years because it is commonly thought of as a table game as it's played on a table, and for years the majority of poker was ring games. With the explosion of the popularity of tourney poker someone at the IRS figured they had to get their hands on Jamie Gold's winnings.

Sure all the IRS needs to do is contact Cynthia McGreevy to get her boss Blaise G. Dusenberry to do a little more homework and cite the correct laws statues or previous decisions.

Because this is a technical issue, IMO, we poker players and the PPA need to make sure we make it clear we have no problem paying a fair tax on winnings. Using this issue to further the "fairness" of only paying taxes on net winnings vs. gross winnings gives it a hook that might resonate enough to justify significant expense.

In the end with-holdings from tourney wins are here to stay, the questions is how do we use that for our best purposes in the future? Getting the IRS to cite the proper laws is important. But in the long run actually having more people experience paying taxes on phantom income {the win one tourney loose two and pay taxes on a loss situation} increaes our chances for the major fight win.

D$D