vpFREE2 Forums

IRS audits

#1

I've just heard from another list member who has had exactly the same
experiences I have. The thing is, by following the Winning Sessions/Losses method
I saved perhaps $2000-2500 in taxes on a year. I was a Net Loser at gambling
by the way.

But now I have to consult a tax professional at about $250 per hour. I've
got to deal with answering the IRS letter audits - which seem to be handled by
low level employees. Phoning the IRS and trying to talk to a supervisor or
manager didn't help - again the people are not knowledgeable.

There is a good chance my next response could be reviewed by equally low
level employees, who'd send me another huge tax bill with penalties and interest
- their figures right now show I won money, when actually I lost money in
2004. I will then be faced with appealing and possibly appealing again, all
the way to tax court.

If I have to continue to hire a tax professional at each step, I'll soon end
up paying more than the tax I would have owed based on the traditional Add
up the W2Gs method.

And the thing is - I did my 2005 Tax the same way, so this could end up with
exactly the same problems.

So I've decided to amend my 2005 Tax return to the W2G method to try to
avoid a problem with that year. I'll probably have to pay some extra interest
and maybe penalties on that.

Meanwhile I am a bundle of nerves, trying to figure out exactly how to
answer the IRS letter, wondering if I could end up being taxed for like an extra
$50,000 or whatever for a year when I actually lost about $30,000 in gambling!

I followed all of Jeans advice on filing, including putting a note about how
I was filing and a copy of all W2Gs with my original return. Yet I received
a letter audit.

My reply to that first letter audit seems to have been totally ignored. So
I'm now writing a reply to the IRS 2nd letter.

How long will this go on? I don't know - all I can say is that it is
extremely upsetting to me! And all the uncertainty just makes me feel it isn't
worth the hassles. Until there is some sort of a definite tax ruling about
Winning/Losing sessions, from now on I'll be filing using the older W2G method
that never got me in trouble, even with large amounts of W2Gs.

One thing I've just learned - it looks like I should have filed Form 8275
with my return to explain positions that are not ordinary.

Anyone using Sessions should look into using Form 8275.

[Non-text portions of this message have been removed]

#2

Amending your return would probably put you at a higher risk of
audit. Hopefully your tax professional should be able to navigate the IRS
and get this behind you quickly. Make sure they are an Enrolled Agent or a
CPA with experience working with the IRS-not all have much experience with
the IRS believe it or not.

Ernie Mayhorn, EA

To ensure compliance with requirements imposed by the US Internal Revenue
Service, we inform you that any tax advice contained in this communication
(including attachments) was not intended or written to be used, and cannot
be used, by any taxpayer for the purpose of (1) avoiding tax-related
penalties under the US Internal Revenue Code or (2) promoting, marketing,
or recommending to another party any tax related matters addressed herein.

···

At 03:38 PM 7/29/2006 -0400, you wrote:

I've just heard from another list member who has had exactly the same
experiences I have. The thing is, by following the Winning
Sessions/Losses method
I saved perhaps $2000-2500 in taxes on a year. I was a Net Loser
at gambling
by the way.

But now I have to consult a tax professional at about $250 per hour. I've
got to deal with answering the IRS letter audits - which seem to be
handled by
low level employees. Phoning the IRS and trying to talk to a supervisor or
manager didn't help - again the people are not knowledgeable.

There is a good chance my next response could be reviewed by equally low
level employees, who'd send me another huge tax bill with penalties and
interest
- their figures right now show I won money, when actually I lost money in
2004. I will then be faced with appealing and possibly appealing again, all
the way to tax court.

If I have to continue to hire a tax professional at each step, I'll soon end
up paying more than the tax I would have owed based on the traditional Add
up the W2Gs method.

And the thing is - I did my 2005 Tax the same way, so this could end up with
exactly the same problems.

So I've decided to amend my 2005 Tax return to the W2G method to try to
avoid a problem with that year. I'll probably have to pay some
extra interest
and maybe penalties on that.

Meanwhile I am a bundle of nerves, trying to figure out exactly how to
answer the IRS letter, wondering if I could end up being taxed for like
an extra
$50,000 or whatever for a year when I actually lost about $30,000
in gambling!

I followed all of Jeans advice on filing, including putting a note about how
I was filing and a copy of all W2Gs with my original return. Yet I received
a letter audit.

My reply to that first letter audit seems to have been totally ignored. So
I'm now writing a reply to the IRS 2nd letter.

How long will this go on? I don't know - all I can say is that it is
extremely upsetting to me! And all the uncertainty just makes me feel
it isn't
worth the hassles. Until there is some sort of a definite tax ruling about
Winning/Losing sessions, from now on I'll be filing using the older
W2G method
that never got me in trouble, even with large amounts of W2Gs.

One thing I've just learned - it looks like I should have filed Form 8275
with my return to explain positions that are not ordinary.

Anyone using Sessions should look into using Form 8275.

[Non-text portions of this message have been removed]

vpFREE Links: http://members.cox.net/vpfree/Links.htm

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[Non-text portions of this message have been removed]

#3

<<Amending your return would probably put you at a higher risk of
audit. Hopefully your tax professional should be able to navigate the IRS
and get this behind you quickly. Make sure they are an Enrolled Agent or a
CPA with experience working with the IRS-not all have much experience with
the IRS believe it or not.>>

I second this recommendation strongly. Marissa and I have a section in "Tax Help for the Frugal Gambler" called "Who's Who in the Tax Business" that explains the different categories of professionals who can represent you before the IRS.

···

________________________________________
Jean $�ott
"FRUGAL VIDEO POKER" - Pre-pub
orders for this new book now taken at
http://www.FrugalGambler.biz

#4

I've just heard from another list member who has had exactly the

same

experiences I have. The thing is, by following the Winning

Sessions/Losses method

I saved perhaps $2000-2500 in taxes on a year. I was a Net Loser

at gambling

by the way.

But now I have to consult a tax professional at about $250 per

hour. I've

got to deal with answering the IRS letter audits - which seem to

be handled by

low level employees. Phoning the IRS and trying to talk to a

supervisor or

manager didn't help - again the people are not knowledgeable.

There is a good chance my next response could be reviewed by

equally low

level employees, who'd send me another huge tax bill with

penalties and interest

- their figures right now show I won money, when actually I lost

money in

2004. I will then be faced with appealing and possibly appealing

again, all

the way to tax court.

If I have to continue to hire a tax professional at each step,

I'll soon end

up paying more than the tax I would have owed based on the

traditional Add

up the W2Gs method.

And the thing is - I did my 2005 Tax the same way, so this could

end up with

exactly the same problems.

So I've decided to amend my 2005 Tax return to the W2G method to

try to

avoid a problem with that year. I'll probably have to pay some

extra interest

and maybe penalties on that.

Meanwhile I am a bundle of nerves, trying to figure out exactly

how to

answer the IRS letter, wondering if I could end up being taxed for

like an extra

$50,000 or whatever for a year when I actually lost about $30,000

in gambling!

I followed all of Jeans advice on filing, including putting a note

about how

I was filing and a copy of all W2Gs with my original return. Yet

I received

a letter audit.

My reply to that first letter audit seems to have been totally

ignored. So

I'm now writing a reply to the IRS 2nd letter.

Here's some interesting thoughts. Some casinos are so lame in
handling their W2g's that you could add them into your total and the
IRS never even receives them from the particular casino. Your
talking about a hand written form that has to be manually inputed
into the computer. Most of the larger casinos now give you computer
generated W2g's. The smaller casinos are still doing them by hand.

The real fun part is playing a machine that generates huge quanity's
of W2g's like $5 double bonus poker. You hit several 4 of kinds and
are constantly getting inundated with forms. In the course of the
year if you play a game like that everyday your bound to lose a few
forms or not record a 4 of kind. Now when you file you get an IRS
letter saying their total W2g's are higher than the amount you
reported and you owe the tax on the gross amount. I know some people
that just pay the tax than trying to explain that you somehow
misplaced the forms and didn't enter them in your gaming log.

What I really enjoy is getting those gross 1099 forms at the end of
year with no breakdown of how they arrived at the figure. It could
be gift card that is lumped in with some tournament winnings. The
casinos all say they won't issue a 1099 on the spot but have to send
you the gross form. Sometimes they don't even get you the form till
March.

···

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