>
> Starting 4/08/08 the IRS will begin witholding 25% of poker
> tournaments winnings totaling over $5000. This change in the IRS
> code went through with very little fanfare. I think it will have
a
> huge impact on the amount of entrants in future tournaments
after
> 4/08/08.
>
The rule won't hurt smaller tournaments but it will DEVASTATE the
major
tournaments. It will wipe out the TV tournaments like the WSOP.
Imagine being a tournament pro running the circuit and every time
you
cash for %5,000 or more you have to give 25% of it to the IRS. It
will
destroy the bankrolls of even the above average players. Only a
small
minority of players could float it.
Maybe a dozen or so years ago the IRS jumped into the middle of
poker
tournaments wanting something like 28% withheld from anyone who
cashed. Their directive came down just before the start of the
Hall of
Fame Poker Classic at the Horseshoe. The Horseshoe used to hold
the
WSOP in the spring and the Hall of Fame in late summer. The
tournament players refused to play and Binion's cancelled the
tournament. And anyone else who tried to hold tournaments wasn't
gonna
get any players either. It was a standoff between the players and
the
IRS. The players weren't stupid. They knew what would happen to
their
bankrolls.
The IRS finally saw the handwriting on the wall. If they held to
their
position they weren't gonna get zilch! Nada!! Nothing!!! So
they
backed off by allowing tournament players to keep their winnings
but
they had to be issued a W2G for any cashes above, I believe,
$600.
Before then W2G's were not issued.
But their was a loophole in the language. Something about the W2G
having to be issued if the winnings were "$600 or 300 times the
buy'in."
Most houses honored the $600 rule but some used the "300 times the
buy'in to not issue W2G's.
When the IRS backed down Binion's cranked up the Hall of Fame
tournaments and everything has been lovey-dovey since.
I haven't seen anything in the poker press about the new rule
yet.
But if what you say is true, trust me, there will be major
fireworks.
New Tax Law Takes Bite Out of Tournament Winnings
Law Will Require Casinos to Take 25 Percent of $5,000 or More
A new tax code has been released that spells out just how much money
the government will take from those who are lucky enough to cash for
$5,000 or more in poker tournaments.
Starting March 4, 2008, casinos and cardrooms are supposed to start
withholding 25 percent of any poker tournament winnings of $5,000 or
more. This will particularly affect the poker hobbyists who go deep
in tournaments with buy-ins that range from $100 to $550, and of
course those who make their living humping the tournament poker
trail.
Language in the new tax code pointed to a tax court ruling that took
place earlier this year. The ruling held that tournament poker is
not a skillful competition and should be considered a gambling
activity, at least for the purposes of taxation.
The law requires casinos and cardrooms to withhold and report the
winnings from a player if it amounts to $5,000 or more in a tax
year. The code does not address winnings from online poker sites or
from casinos off U.S. soil.
Here's an example of how much money the government will be making
off of poker tournaments after March 4, 2008. If the law was in
effect earlier this month, the top seven finishers of the $500 event
that took place Aug. 7, at the Legends of Poker would have paid a
total of $40,221 in taxes.
The runner-up of this tournament, which attracted a healthy 460
entrants, would have taken home $27,972 after taxes ($37,295
before). The winner received $74,585. If the law was in place, that
amount would've been $18,646 less.
The notice that was released to accounting firms this week follows:
···
--- In vpFREE@yahoogroups.com, "mickeycrimm" <mickeycrimm@...> wrote:
--- In vpFREE@yahoogroups.com, "VpKing77" <vpking77@> wrote: