Poker Tournament Sponsors Must Report Winnings to the IRS Starting in 2008 (IR-2007-173)
The IRS has issued a news release reminding poker tournament sponsors, including casinos, that they will be required to report most winnings to winners and the IRS starting on March 4, 2008. The new reporting requirement was first announced in September 2007 in Rev. Proc. 2007-57, I.R.B. 2007-36, 547 (TAXDAY, 2007/09/04, I.1). According to the IRS, the guidance was issued in order to clear up confusion among poker tournament sponsors and participants about withholding and information reporting obligations that apply with respect to tournament winnings.
Poker tournament sponsors will not be required to report winnings to the IRS with respect to tournaments that are completed during 2007 and prior to March 4, 2008. However, beginning March 4, 2008, tournament sponsors will be required to report winnings of more than $5,000 on Form W-2G, Certain Gambling Winnings.
According to the news release, tournament sponsors that comply with the new reporting requirement will not be required to withhold federal income tax at the end of the tournament. In the event that a sponsor fails to report the winnings, the IRS will not only enforce the reporting requirement but, in addition, will require the sponsor to pay any tax that would have been withheld from the winner had the withholding requirement been imposed. The withholding rate is normally 25 percent of the amount that should have been reported.
CCH Comment. The statement that poker tournament sponsors need not withhold federal income tax if they comply with the new reporting requirement was not contained in Rev. Proc. 2007-57. However, Rev. Proc. 2007-57 does state that "the IRS will not assert any liability for additional tax or additions to tax for violations of any withholding obligation with respect to amounts paid to winners of poker tournaments" if the tournament sponsor meets information reporting requirements.
Certain information to be used by the tournament sponsor for the purpose of completing the Form W-2G is to be supplied by the recipient of the winnings. Such information includes the winner's taxpayer identification number, which, for individuals, is usually his or her social security number. In the event that the winner fails to provide this information, the sponsor must withhold federal income tax at the rate of 28 percent.
Tournament winners are reminded that, by law, they are required to report all their winnings on their federal income tax return, regardless of the amount and regardless of whether or not they receive a Form W-2G or any other information return. This is true both before and after the new reporting requirement goes into effect.
IR-2007-173, 2007FED ?46,680
Greedy fukcs!
The IRS has issued a news release reminding poker tournament sponsors, including casinos, that they will be required to report most winnings to winners and the IRS starting on March 4, 2008. The new reporting requirement was first announced in September 2007 in Rev. Proc. 2007-57, I.R.B. 2007-36, 547 (TAXDAY, 2007/09/04, I.1). According to the IRS, the guidance was issued in order to clear up confusion among poker tournament sponsors and participants about withholding and information reporting obligations that apply with respect to tournament winnings.
Poker tournament sponsors will not be required to report winnings to the IRS with respect to tournaments that are completed during 2007 and prior to March 4, 2008. However, beginning March 4, 2008, tournament sponsors will be required to report winnings of more than $5,000 on Form W-2G, Certain Gambling Winnings.
According to the news release, tournament sponsors that comply with the new reporting requirement will not be required to withhold federal income tax at the end of the tournament. In the event that a sponsor fails to report the winnings, the IRS will not only enforce the reporting requirement but, in addition, will require the sponsor to pay any tax that would have been withheld from the winner had the withholding requirement been imposed. The withholding rate is normally 25 percent of the amount that should have been reported.
CCH Comment. The statement that poker tournament sponsors need not withhold federal income tax if they comply with the new reporting requirement was not contained in Rev. Proc. 2007-57. However, Rev. Proc. 2007-57 does state that "the IRS will not assert any liability for additional tax or additions to tax for violations of any withholding obligation with respect to amounts paid to winners of poker tournaments" if the tournament sponsor meets information reporting requirements.
Certain information to be used by the tournament sponsor for the purpose of completing the Form W-2G is to be supplied by the recipient of the winnings. Such information includes the winner's taxpayer identification number, which, for individuals, is usually his or her social security number. In the event that the winner fails to provide this information, the sponsor must withhold federal income tax at the rate of 28 percent.
Tournament winners are reminded that, by law, they are required to report all their winnings on their federal income tax return, regardless of the amount and regardless of whether or not they receive a Form W-2G or any other information return. This is true both before and after the new reporting requirement goes into effect.
IR-2007-173, 2007FED ?46,680
Greedy fukcs!
