An Internal Revenue Service proposal requiring casinos to hold 25 percent of poker tournament winnings in excess of ,000 has been nixed, ending a month of fearful speculation about the repercussions of the policy.
After some negotiations between the IRS and representatives of the casino industry, including the American Gaming Association, a compromise was reached. Casinos will be required to report tournament winnings in excess of $5,000 on a W-2G form. Players will still be responsible for paying taxes on their winnings, but the casinos will not be required to withhold those taxes.
It’s a similar situation to other taxing policies associated with other casino winnings like slot and video poker machines jackpots in excess of $1,200.
In situations where players refuse to provide personal information necessary to complete the tax forms, the casinos will be obligated to withhold taxes immediately. If the casino does not withhold taxes or the player cannot be found, the IRS could come after the casino for the tax owed.
AGA lobbyist Wally Chalmers said the industry is happy to avoid the onerous requirement of withholding winnings, players are happy because it can help preserve their bankrolls until tax time, and the IRS benefits through the creation of a paper trail on more players who cash in tournaments.
