Casino News

JK Harris & Company explains that the IRS is taking the confusion out of reporting poker tournament winnings for players and sponsors.

North Charleston, SC (PRWEB) November 29, 2007 -- Poker players and tournament sponsors beware. The IRS is implementing a new requirement for reporting poker tournament winnings beginning March 4, 2008.

"In the past, sponsors and players have been confused over whether sponsors who hold the money for players are required to report the winnings and/or withhold taxes on the winnings," said Mark Walstrom, an Enrolled Agent and Licensed Taxpayer Representative from JK Harris & Company, the nation's largest tax resolution firm.

Under the new regulations, all tournament sponsors will be required to report tournament winnings of more than $5,000 to both the tournament winners, usually using IRS form W-2G, as well as to the IRS. However, the sponsors will not be required to withhold taxes on those winnings, as the IRS had previously proposed.

But if the tournament sponsor does not report the winnings, the IRS will enforce the reporting requirement and require the sponsor to pay any tax that should have been withheld from the winner had the withholding requirement been asserted. That amount is normally 25 percent of the dollar amount that should have been reported.

Another twist is that tournament winners must provide the sponsors with their taxpayer identification number, usually a social security number. If the winner fails to do this, the sponsor must then withhold federal income tax at the rate of 28 percent.

"It will eliminate a lot of the unnecessary confusion and, hopefully, prevent some underreporting issues as well," Walstrom said.

For those tournaments completed during 2007 and before March 4, 2008, casinos and other sponsors will not be required to report winning or withhold tax on winnings.

And just a friendly reminder from Walstrom: "Tournament winners should already be reporting their winnings on their federal tax returns, regardless of whether or not they receive Form W-2G," he said.

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