HomePublicationsNewsletter ArchiveNewslettersVolume 21Issue 19Casinos Outline Concerns with IRS Proposal to Change Casino Tax Regulations

The American Gaming Association (AGA) filed comments this week as the Internal Revenue Service (IRS) closed the public comment period on its proposal for reporting requirements on winnings from slot machine, bingo and keno play. The IRS is proposing mandatory electronic player tracking regulations using player loyalty cards for tax reporting purposes and may consider lowering the winnings threshold from $1,200 to $600.  

“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,” said Geoff Freeman, president and CEO of the AGA. “Further, members of Congress from eleven states and every segment of the gaming industry – operators, suppliers and customers – are united against the potential proposal to lower the gaming winnings threshold for federal tax withholding from $1200 to $600.”

Such a threshold reduction would render slot machines inactive for significant periods of time. As a result, the move would lead to a decrease in state gaming revenues and harm the customer experience.

While expressing concerns, the AGA also aims to help the IRS meet its goals of increasing efficiency and gathering more accurate information.

“We look forward to collaborating with the IRS to improve the efficiency, accuracy and customer-friendliness of the tax reporting process,” said Mr. Freeman. “We appreciate the approach the IRS is taking to this complex issue and look forward to building a stronger relationship.”

After the IRS announced the proposal on March 4, the AGA convened experts from member companies for regular meetings to assess each aspect of it, built consensus and formulated an effective response. AGA officials also met with the IRS in person to discuss the proposal last month.

Earlier this week, 17 members of Congress from eleven states sent a letter to the IRS outlining their concerns with the proposal. States represented are Arizona, Colorado, Florida, Indiana, Iowa, Louisiana, Mississippi, Missouri, Nevada, New Jersey and Ohio.

“If the proposed regulations are set forth as mandatory, then the gaming industry’s significant labor cost and lost business revenue to comply would be detrimental to local, state and national economies that depend on needed dollars to support critical services,” wrote the congressmen.

In its comments, the AGA expressed concern with the proposed mandatory slot tax information reporting that is based on electronic player tracking by the casino. Such a requirement would adversely affect a crucial casino marketing tool and could have a chilling effect, as customers would be reluctant to use or sign up for loyalty cards associated with tax tracking and collection.

AGA also warned that current electronic player tracking systems were designed for marketing purposes and lack the types of controls necessary to ensure proper compliance with tax information reporting. Conflicting state tax reporting and withholding requirements would also pose serious challenges.

While the public comment period closed this week, the process of writing the final regulation is just beginning, and input remains valuable. By the end of the public comment period on Tuesday, more than 13,000 people had expressed opposition to the proposal by signing a petition, leaving a comment directly with the IRS, or contacting their member of Congress by phone, on Twitter or on Facebook.

“This is what 21st century advocacy looks like,” said Freeman.

The IRS will hold a public hearing on the proposal on June 17 in Washington, D.C.

Read the AGA’s public comments in response to the IRS proposal.

 

Upcoming Events

Casino Job Board

Official Publications

 

RMC Legal

Visit our other website below: