Casinos, allies blitz IRS on proposed reporting rule

3 June 2015

WASHINGTON — The casino industry and its allies on Capitol Hill have mounted a late push to persuade the Internal Revenue Service to back away from a proposal that would require winners of $600 jackpots to be reported to tax collectors.

A winnings threshold of $1,200 now triggers casinos to prepare W2-G forms for customers who win at bingo or slots. It’s $1,500 for keno. Gaming executives say lowering the threshold would mean added paperwork for casinos, disruptions on the casino floor and costly upgrades to systems necessary to track winnings in larger numbers.

Casino also fear the regulation could have a potentially chilling effect since the IRS has suggested the rule could be carried out through electronic tracking of wagers and winnings via player’s cards.

“The gaming industry is aware of no other industry in the country for which the IRS has issued regulations requiring the industry to deploy its customer loyalty program for federal tax collection purposes,” American Gaming Association CEO Geoff Freeman, said in comments to the IRS this week.

Sen. Dean Heller, R-Nev., pressed IRS Commissioner John Koskinen in a phone call Monday to reconsider the regulation. He brought it up again with Koskinen at a Senate Finance Committee hearing Tuesday.

Sen. Harry Reid, D-Nev., met with Koskinen last month, a spokeswoman said.

Seventeen congressmen representing legalized gambling states made the same pitch in a letter to the IRS earlier this week. Signers included all four lawmakers from Nevada, as well as some from Mississippi, New Jersey, Indiana, Arizona, Florida, Iowa, Ohio and Louisiana.

Meanwhile, the American Gaming Association, the casino industry’s policy and politics arm, sought to stir up the grass roots.

Two weeks ago, the association distributed lobbying tool kits to members, suggesting it was important that the IRS “hears from a wide array of voices about the negative implications that any reduction would have.”

The association suggested customers be asked to contact their representatives via phone, Twitter or Facebook, using a provided script to complain about the “burdensome” requirement that could dampen their casino experience.

The campaign yielded 10,000 signatures on an online petition, and another 3,000 customer comments directly to the IRS, said Chris Moyer, the association’s communications director.

Freeman said casino customers from all 50 states responded in some way.

“Every segment of our industry — operators, suppliers, and customers — is united against this proposal,” Freeman said. “And this is what 21st century advocacy looks like.”

The IRS will gather more reaction at a June 17 public hearing in Washington.

The agency unveiled its proposal March 4. It said reducing the reporting threshold to $600 would make the gaming industry consistent with other trades and businesses that must report every person to whom it makes a payment of $600 or more in a given year.

If anything, Heller said the reporting threshold should be increased to near $5,000, which amounts to the $1,200 level established in 1977 plus inflation.

“I don’t think they are going to do that,” he said. “But they may consider looking for what’s a more reasonable approach.”

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