The Internal Revenue Service had proposed a new rule that would take 25% of poker tournament winnings of over $5,000 from players. Thankfully, this rule has been withdrawn. The idea was withdrawn after an evaluation of the rule’s feasibility and discussions with the IRS rules making group. The American Gaming Association’s Tax and Finance Task Force fought against the proposal. The AGA is a leading group that is involved in land-based casino matters.
This rule if enforced would have caused many problems for casinos and players. It would increase casinos’ reporting of tax issues, and reduce the amount of tournament winnings professionals receive when they are in several events. It would also affect players being able to pay entry fees to an event and over time could minimize the amount of players able to afford the high buy-in these events. This is according to Wally Chalmers, Vice President of the American Gaming Association.
Since the rule has been withdrawn, players will have to fill out an earnings/tax statement to state their winnings. The type of form and way of reporting it has not been stated yet. It may be similar to an IRS Form W-2G which is a report of miscellaneous income. Regardless, some form of reporting will have to be done to record a player’s winnings.
According to Pokernews who spoke to Chalmers, he stated; the AGA is “very pleased that it has worked out the way it has.” And as soon as the new IRS rule has been finalized it will be released.