First of all, let me make it clear that while I report my wins and losses by the session method, regardless of whether they generate W2Gs or not, I agree that the proposed new rule is a nuisance at best, and certainly a bad idea overall. On the other hand, trying to get the IRS to make an "inflation" adjustment on the existing rule, when they're headed the other way with this proposed rule, is pie in the sky, and simply won't happen.
Importantly, the way to try to stop this is NOT to complain on this discussion group. One should file one's "testimony" with the IRS on the PROPOSED rule (not every rule that is proposed gets adopted as proposed after public comment), and to do so before the deadline for public comment expires (not sure when that is, but this has been out there for a few weeks, so probably pretty soon). If it affected me more personally, I would find out how to do this and do so myself, but I'm already backing off of VP substantially since the local casinos in my state no longer offer 9/6 JoB single line $1, so that now it is no longer even close to break-even (i.e., 0.5% casino edge). And filing a "public comment" is somewhat time-consuming.
I would advise that no one waste their time in any comments filed, trying to go for an action in the opposite direction. The best arguments are (1) the slow-down it play that it causes will be a nuisance to players and may even reduce overall gambling losses and the taxes realized on those losses, so that it doesn't actually increase tax revenue overall, and (2) it is an unnecessary generation of more paperwork and headaches, unnecessary because the income is already reportable whether a win generates a W2G or not, so that their time would be better spent going after the rest of the gambling income that people are not reporting.
As for the change in pay tables, I fail to see how ANYONE will find a change from 100.6463% to 100.6459% to be very significant. Where did that argument come from??? The loss of play opportunity for the more-frequent hand-pay if the new rule is adopted will have a more significant impact on return, as will, of course, the cuts in pay tables that we already see without any tax considerations.
Certainly the IRS is doing this because they think that gamblers under-report their winnings, and I have every reason to believe they are correct, for the most part -- and I certainly support their efforts to get those who don't pay their fair share of taxes to do so. I support those efforts even more in areas where people are REALLY doing significant under-reporting, which is not gamblers, and I don't think that capturing the tax on payouts $600 and over but under the current $1200 will make much of an impact on the problem of under-reporting as a whole. But I understand that this one is an easy one for them, while finding other unreported income would probably be much more labor-intensive (translate: expensive).
Also, the IRS budget is constantly being cut, so that audit rates are already much lower than the IRS would like them to be. While I've only been audited once, a long time ago, and while it resulted in a compromise that I was happy with, that was when I was a student and had time to kill. True, I'm now retired, but while the time is there again (it was definitely not "there" when I was working full-time), I would not enjoy "winning" an audit as much as I did as a student. But my point is simply that the IRS, with reduced funds, is looking for inexpensive ways to capture currently un-reported income, and that gambling income is an easy target.
This will, indeed, have the greatest burden on casinos, which will have a lot more labor expense to comply with issuing more W2Gs (or, if they don't up the labor force, they will lose revenue while players wait too long for their paperwork, AND will lose revenue when players decide not to play there anymore if they don't generate the paperwork pretty quickly).
Likewise, the slow-down in generation of casino revenue caused by this rule would trickle down to less taxable revenue for the state to receive, although that might be offset by the greater personal income tax paid when more winnings are reported. Other than that aspect, I'm not sure why the states would want to fight this.
While I don't perceive the body of citizens affected by this as being a politically active group, again, filing a comment in opposition with reasons that the IRS will find persuasive, is the correct way to address this "issue."
--BG===============
1a. Proposed IRS Rule Change From $1200 to $600 on W2-G Jackpots
Date: Sat Apr 25, 2015 7:12 am ((PDT))
...
The $600 threshold would wreak havoc on higher denom players and casinos alike, and maybe even the IRS. I think a lot of recreational players would simply quit playing at those levels if they have to sit around waiting on W2'G's all day. Consequently, less profit for the casinos, lless taxes for the state, less taxes for the IRS.
For lower denoms we could all be looking at different payscales. For example, take FP Kings or Better Joker Poker at the 25 cent denom (now 100.6463%). Adjust the Royal payout to 460 for 1, the 5K payout to 250 for 1, and the JR to 130 for 1 and you have a 100.6459% game.
I'm sure the casinos will fight this tooth and nail. But I think state governments need to get into action against it too, and gamblers everywhere need to jump on the bandwagon against the rule change. If anything, it should be adjusted the other way. I think we all need to flip this thing over on the IRS. The level needs to be adjusted the other way....raising the W2-G threshold to at least $4000.
[Non-text portions of this message have been removed]
Posted by: Barry Glazer <b.glazer@att.net>
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