Of course I kept copies of everything. The note (a form letter) said to send them the missing W2s, W2Gs, and 1099-Rs. I didn't have any 1099-Rs (nor any reason on my tax return for them to think I should). I was sure I sent them their copy of the W2, but sent the spare copy back along with the explanation of my gambling wins and losses which was the only logical reason they would have thought they didn't have everything unless they had misplaced the W2s.

Tourney Tax scenarios

posted a couple of hypothetical situation about taxes and big tourney wins. a couple of thoughts would be appreciated.

I believe it is against the rules of this forum to discuss how to commt a crime. Your hypothetical situations appear to be doing just that.

I only have one thought here and you wouldn't like it.

The first scenario is clearly not illegal since it's already been written into law. The second scenario could be an ignorant, honest mistake.

Tax Law (from CardPlayer.com)
"Starting today, the IRS will know just how much a player who won more than $5,000 actually won and will demand the player pay taxes on the winnings of 25 percent. If a player refuses to give the casino his tax information, then the casino must take 28 percent of the winnings for taxes."

Or does this mainly apply to international winners?

The first scenario is an attempt to avoid reporting income (presumably because your actual tax bracket is lower than the percentage that is withheld) and concerned what would happen if the IRS discovered you had this income without knowing where it came from. If that isn't the reason for considering this then there is no practical reason to do so.

The 2nd scenario, if I understand your suggestion, is suggesting deducting the same items twice. Doing that is tax fraud and clearly illegal.

So what's the rationale behind the new tax law for tourney winnings? Is it just a way for Uncle Sam to guarantee they get their cut w/o the chance of the winnings to get laundered thru other things? I'm rather curious.

I realize this is nitty hairsplitting, but this is not a new law. It is a new regulation. Laws are passed by congress. Regulations are policies implemented by agencies (the IRS in this case) to help enforce the laws. (Someone more versed in law may come along and say I'm wrong, but I'm essentially right.) The point of the new regulation is to make sure the IRS either knows who had the big win (from the SSN on the ID you provide the casino) or that they have the tax money in advance. The tax liability has always existed. This is just an attempt by the IRS to cut down on those cheating on their taxes.

This regulation is something that has been in place already for other wins in casinos (big slot wins for sure). It is also similiar to regulations in other areas that have been put in place over the last 20 years or so (called "backup withholding"). If you haven't provided correct information to your bank or (I believe) have neglected to report interest income in the past your bank may have to withhold taxes on interest paid. Insurance companies are required to withhold taxes on payments made to service providers (doctors, dentists, etc) under the same kind of circumstances. I'm sure there are lots of other situations where the IRS has similiar regulations in place.

thanks for the clarification. makes sense.

i find it interesting that people can still 'refuse' to provide ID. any ideas on the legitimacy of this? i take it that the casino really has no right to withhold whatever you win but has can withhold what they'd be legally obligated to pay taxes on.

I believe what you're saying is true (that someone can refuse to provide ID and the repercussion will be they withhold a set amount, 28% I think). I'm not sure why anyone would do that. There may be some legitimate (or not so legitimate) reason why someone would choose to do that. If there is I can't figure it out.