IRS Boneheads Want to Cut Casino Jackpot Reporting Trigger in Half

The Internal Revenue Service has proposed lowering the reporting level for casino slot machine jackpots from $1,200 to $600.

Typically, when a slot jackpot of $1,200 or more is won, the machine locks up while players endure a time-consuming process of filling out paperwork to ensure taxes are paid on the winnings. If the IRS proposal goes through, players will get to go through the irksome practice for jackpots half that size.

slot jackpot

What’s the best way to kill the buzz of a slot machine jackpot? IRS paperwork.

The new reporting level would also apply to wins in bingo and keno. At the moment, wins of $1,500 or more are reportable in keno, the game with the worst odds in a casino, we might add.

Thankfully, the new IRS reporting rules aren’t a done deal. The casino industry has three months to respond to the regulatory changes which were apparently concocted by someone with severe head trauma.

The American Gaming Association, a trade group that represents the casino industry, is expected to dig its heels in on these rule changes. Even the current jackpot reporting threshold keeps players from playing and that downtime, beyond being an annoyance, costs casinos lots of cash (we’re talking millions of dollars here), which translates into lost taxes, which seems to undermine the Internal Revenue Service’s goal in the first place.

Wheel of Fortune

Ever see a Wheel of Fortune machine with a maximum win of $1,195? That’s to avoid the hassle of doing IRS paperwork. Now you know.

According to a Las Vegas Review-Journal story, the IRS “may not believe this is much of an administrative hassle.” Which, we’re thinking, is an indication the IRS understands casinos like the Amish understand iPads.

This IRS rule change may also have consequences beyond the obvious. One of our commenters, Andy Bruinewoud, adds, “It’s an annoyance for U.S. players. It might be a back-breaker for Canadians or other foreign visitors who don’t have withholding tax treaty protections. We pay 30% non-resident tax on winnings. If the threshold gets lowered to only $600, people will either play smaller on the machines or switch to table games. Or, of course, not come at all. Bad for Vegas, where the highest percentage of foreign tourists are from Canada.”

Here’s hoping the American Gaming Association and casinos bring all their resources to bear to make this IRS dipshittery disappear faster than a cheater at Binion’s back when Benny ran the place.

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11 thoughts on “IRS Boneheads Want to Cut Casino Jackpot Reporting Trigger in Half

  1. Andy Bruinewoud

    It’s an annoyance for U.S. players. It might be a backbreaker for Canadians or other foreign visitors who don’t have withholding tax treaty protections. We pay 30% non-resident tax on winnings. If the threshhold gets lowered to only $600, people will either play smaller on the machines or switch to table games … or, of course, not come at all. Bad for Vegas, where the highest percentage of foreign tourists are from Canada. Terrible for casinos based near the northern border.

    Reply
  2. Steve_in_WI

    I don’t think it undermines the IRS’s goals at all. I would imagine taxes paid on jackpots won by people who do not itemize, and therefore cannot deduct their losses against winnings, add up to a hefty sum. I’ve paid almost $3,000 in federal taxes that by any logic I should not have had to pay thanks to that. I was a net loser for the year, but if I don’t itemize I can’t deduct losses against the W2Gs. And since I come out ahead with the standard deduction, I end up paying taxes on phantom winnings.
    Regardless of the reporting regulations, the rules should simply be that if you’re only taxed on what you actually won, period.

    Reply
  3. Jonathon Bartlett

    It may not appear as though it undermines the IRS’s goals, but it does. Imagine a $5.00 machine that probably hits $600.00 jackpots on a regular basis. The 10-15 minutes it takes to handle the paperwork on that jackpot results in a loss of those spins for that player, or any other player who would have sat at the machine. As a former casino employee, you’d be surprised at how many times a $600.00 jackpot actually hits and if you multiply all of those hits by the paperwork time, you’re looking a considerable loss. When looking at it from the individual level, it doesn’t look like the blog makes sense, but on a global scale, it really does. The IRS could be losing a lot of money in the long run. Plus, being able to say “I hit a taxable jackpot!” won’t be nearly as exciting anymore since it will become so commonplace.

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  4. wysiwyg100

    This will kill the $1 machines. For penny and nickel machines it hardly matters, quarters will get a little borderline. But dollar machines and up? Fuhgeddaboutit. It’s bad enough when jackpots over $1200 get reported and I end up paying taxes on them, when in reality they’re just reducing my losses. Now all jackpots between $600 and $1200 also? On a recent trip I hit jackpots of $800, $720, $640 and $600. Good trip, played a lot, ended up with a small loss after six days. Under new rules I would owe an additional $1000 in taxes on these phantom “wins”. I’m sick to death of this. My options are to play quarters instead (not as exciting, lose good comps) or just chuck it all.

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  5. swimjim76 .

    Has this little piece of legislation been enacted yet? Really bad news for Canadians heading to Vegas as we pay taxes right on the spot of any hand pay. Heading there in Dec.

    Reply

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