In response to efforts spearheaded by the NTRA, the United States Department of the Treasury and Internal Revenue Service (IRS) are considering changes to reporting and withholding requirements related to pari-mutuel winnings.
The changes would positively impact all levels of horseplayers, regardless of whether a person wagers $1, $100 or $1,000. For example, the amount wagered by a Pick Six player who hits with one of 140 combinations on a $1-minimum wager would be $140, which is the total amount bet into the Pick Six pool. Currently the “amount wagered” is calculated using only the $1 bet on the single winning combination. By understating the amount wagered in this manner, the IRS is imposing significant additional reporting and withholding obligations on horseplayers while creating unnecessary paperwork for the IRS.
A clarification would directly benefit pari-mutuel customers by reducing burdensome tax obligations. The proposal also aims to lessen racing’s competitive disadvantage against other forms of gaming that are not subject to such aggressive tax treatment related to reporting and withholding. According to Steven Crist of the Daily Racing Form, redefining the way the IRS calculates the amount wagered to include all money bet by an individual into a single pool would eliminate a high percentage of the reporting and withholding tickets and could increase pari-mutuel wagering by as much as 10%, or $1 billion, in year one alone.
An easy-to-use, self-populated electronic message has been established at www.NTRA.com/IRScomment for individuals to submit a comment directly to Treasury. A number of important organizations have submitted comments in support of the change. Recent communications with the Treasury department indicate that Treasury is closely monitoring both the quality and quantity of comments. Thus, the NTRA is pushing the industry to submit at least 10,000 comments to reinforce that the change it is seeking is vitally important to the industry.
The deadline to submit a comment is Tuesday, June 2. Please act now.
Thank you in advance for supporting this initiative.
Read this column by Andy Beyer for a layman’s explanation. It is time for a change.
Tax rules on horse track winnings in desperate need of modification
by Andy Beyer
Horseplayers are accustomed to dealing with tough losses and cruel tricks of fate, knowing that they are an inescapable part of the game. But most bettors cannot abide a rule that was issued by the Treasury Department in 1978 and has tormented them ever since.
Treasury mandated that bettors fill out a tax form before collecting “certain gambling winnings” and that the Internal Revenue Service withhold tax from large winnings. Some results of the policy were unfair: The IRS confiscated money from many bettors who, at year’s end, didn’t owe any taxes. The rules that govern reporting and withholding have become absurdly outdated but have undergone little change in 37 years.
READ THE ENTIRE COLUMN HERE