Feds back down on tracking winnings for reporting
A year of intense lobbying by the American Gaming Association and other gaming industry interests has defeated a controversial proposal by the U.S. government that would have lowered the tax reporting threshold from $1,200 to $600.
The Internal Revenue Service has dropped the proposal to lower the threshold at which slot play must stop for the issuance of a federal W2G tax form. The AGA and other industry interests had lobbied hard against the proposed change, which would have disrupted play for thousands of customers and seriously hampered business on U.S. slot floors. Also dropped was a separate, equally controversial proposal to use player loyalty cards to track wins and losses for reporting to the federal government for tax purposes.
Last week, the IRS issued its final regulation dropping both proposals.
“Today’s final IRS regulation is a big win not only for gaming companies and millions of casino visitors, but also for state and local governments who would have received fewer gaming tax dollars as a result of what would have been burdensome federal requirements,” American Gaming Association President and CEO Geoff Freeman said in a statement lauding the decision.
In the end, the AGA convinced IRS officials that even the current $1,200 tax threshold is low, considering it was instituted 40 years ago and was never adjusted for inflation. “Our grassroots campaign mobilized thousands of casino customers, members of Congress from 11 states urged restraint, and compelling research demonstrated that the tax threshold should be at least $4,700 when adjusted for inflation,” Freeman said. “We look forward to continuing to work with the IRS and our federal partners to modernize regulations and protect millions of casino customers around the country.”
The AGA had worked hard to educate IRS officials on the damage the two proposed changes would have done to the industry, estimating that the changes would cost a casino as much as $600,000 a year. In testimony submitted to the IRS, the AGA pointed out that loyalty cards were designed for marketing purposes, and it would be difficult to alter the systems to meet IRS tracking and reporting standards. Players sharing cards and playing without cards would further cloud the issue, they said.
The AGA said the IRS employed many of the industry’s suggestions in reaching its conclusion. “On the optional aggregation method, payee ID, and other provisions, the final regulation appears to incorporate many of AGA’s technical suggestions, such as use of gaming day for optional aggregation,” the AGA said in a statement.
The tax reporting regulations also addressed proposed changes in the tracking of parimutuel horse wagers. The proposed regulations clarify “the amount of the wager” to include the entire amount wagered into a specific parimutuel pool by an individual—not just the winning base unit as is the case today—so long as all wagers made into a specific pool by an individual are made on a single totalizator ticket if the wager is placed onsite.
“This is a tremendous step forward in our ongoing efforts to modernize parimutuel regulations to accurately reflect today’s wagering environment,” said Alex Waldrop, president and CEO of the National Thoroughbred Racing Association. “The NTRA remains thankful to everyone who has engaged in this process.”
