Any Efforts To Increase the Reporting Threshold for Slot Jackpots?

I can't even find out when the $1,200 tax threshold for slot jackpots was established by the IRS. I'm wondering if there have ever been any efforts by politicians or organizations to increase that threshold. If it were indexed to inflation as many things are, perhaps we would see a more realistic amount. If inflation is subtracted from the $1,200 threshold, we're probably paying tax on an amount that would be triggered by probably less than $100. Kind of seems unfair, and yes, I realize much of the IRS law seems to be.

And

I saw an article the other day published by the the Nevada Independent that said that the IRS Advisory Counsel supports raising the threshold for taxable slot winnings from $1,200 to $5,800. The article was a bit vague, but I did a bit of research and found that the IRS Advisory Council officially addressed this in their November 2023 Public Report. (https://www.irs.gov/pub/irs-pdf/p5316.pdf) page-135. Does anyone have any inkling as to how many of these "recommendations" go on to fruition? It looks like there is at least some progress on this after all these years.

It's tax time and this is one of our most frequently asked questions about the IRS vis-a-vis gambling.

The IRS regulation that slot and video poker machines go into what's known as “IRS lockdown” was imposed in 1977. Being 47 years old, it's pretty well known. In all that time, it has never been revised, even though $1,200 in 1977 would be around $5,000 today in inflation-adjusted dollars. Hence, the desire of interested parties to raise the reporting threshold to $5K.

In 2015, the IRS proposed some new regulations about how it wanted to treat casino-machine gambling wins. But instead of raising the amount that would trigger a W-2G from the old '70s amount of $1,200 by applying inflation indexing, Revenue proposed to lower that figure to $600. Believe it or not.

When the proposed new IRS regulation came out, the casino world reacted with an uproar. It was a rare occasion when the entire gambling universe, from the giant casino corporations and tribal casinos down to penny slot players, united to oppose the plan.

Since then, modernizing the threshold remains a priority issue for the American Gaming Association, the lobbying arm of the casino industry. They've addressed the Treasury Department directly and enlisted support from allies on Capitol Hill to encourage a regulatory change.

The AGA isn't going it alone. Casino companies are also lobbying their constituent lawmakers.

In addition, Nevada Representative Dina Titus began pushing for IRS-lockdown reform in 2015 and didn't let up in the subsequent congressional sessions. She was joined by Nevada's other representatives along the way. Nothing happened and we do mean nothing.

Then, coincidentally as we were preparing this QoD and as the second question states, it was reported that the IRS' own Advisory Council (IRSAC) issued an opinion last November and officially announced on February 15 that the threshold should be changed.

To what? No, not the $600 the IRS proposed, not $2,000, $3,000, or even the $5,000 that the AGA and the Nevada caucus have asked for, but -- are you sitting down? -- $5,800. That number is based on current accounting for inflation; the Council also suggested that the threshold could be increased again based on cost-of-living adjustments each year.

We tried to find information on whether the IRS acts on IRSAC recommendations, but came up empty. We note that the Council consists of a couple of dozen volunteers from the tax industry -- lawyers, CPAs, enrolled agents, certified public accountants -- and other interested parties, such as state revenue officials, law and accounting academics, taxpayer advocates, etc. So we can't comment on the likelihood of the IRS reaction to the recommendation.

That said, this development is so recent that the IRS hasn't issued any comment on it and frankly, we're not holding our breath waiting for it to do so. But as the second question notes, this cause has suddenly, after all these years, started to heat up.

Reportedly, recent commissioners of the IRS have been reticent to take unilateral regulatory action, since various bills have been proposed in Congress. But now, with the Advisory Council recommendation, the current commissioner is being "encouraged" by the gambling lobby to raise the threshold.

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Mufasa Thedog Feb-25-2024

Pari-Mutuels

The pari-mutuel industry (race tracks) were able to get the IRS to change the formula for determining what qualifies as reportable winnings, in 2017.  This has resulted in about a 90% reduction in W-2Gs issued.

Maybe the AGA should hire the same lobbiests that the race tracks used.

Donzack Feb-25-2024

Picket

Let’s stop gambling, get out the picket signs and march on the strip and the Nevada IRS headquarters. LETS MAKE GAMBLING FUN AGAIN, KEEP YOUR HANDS OUT OF OUR BANKROLL and my favorite DONT SWITCH $$$$$ IN THE MIDDLE OF A SCREW, VOTE FOR NIXON IN 72. If the last one is inappropriate you can clean it up. It is my favorite. If we keep playing and paying the keep taxing. What would happen if we refused hand pays? Would that be legal?

Bernard Berg Feb-25-2024

IRS

They drag their feet on this because gambling "wins" take in a lot of money for the government.  The Little Old Lady loses $5k a year at bingo but if she hits for $1201 she pays taxes on that.  Why? because like the majority of Americans, she does not itemize her deductions.  I can itemize my losses up to the amount of my "wins."  Just once before I croak I would LOVE to pay taxes on my gambling - this is because it would mean that I actually had a net WIN for the year!  Would that be great or what?

Bernard Berg Feb-25-2024

IRS

Here is another problem with gambling "wins" as viewed by the government.  One year I had over $70k in W-2g forms but I had well over that in certifiable loses that I could itemize.  But not all was fine with this.  The extra fake income caused my "adjusted GROSS income" to go up to the point where my Medicare payments went way up! The government looks at the your income before the appropriate deductions to make this change.  Yet another unfairness gamblers face.

jay Feb-25-2024

Aftertax

You gamble with after tax money, you should win after tax money. 
The casino should pay tax on their hold as that is their earned income.

Trainwreck Feb-25-2024

Infernal Revenue Service

I never fully understood the concept that deductions for losses cannot exceed winnings.

Scott Fegley Feb-25-2024

Game Changer

This would be a game changer. I'm a .25 denomination Video Poker player and refuse to bump up to even the .50 denomination due to the current $1200 W-2G threshold on machines.

John Hearn Feb-25-2024

It should be changed, but

It keeps me playing quarters and that is ultimately a good thing, most likely. The wife sweats playing quarters so I know she won't mind. We have her nickel VP spot grooved in at the 4Q.

Louis666 Feb-25-2024

taxes

Every penny you win is taxable income. If you dont want to pay taxes dont on your winnings don't play.

Kevin Lewis Feb-25-2024

NET winnings

I'm willing to pay taxes on what I actually won--LAST YEAR--CUMULATIVELY. The current system is like, whenever you win a dollar, you have to toss twenty cents over your shoulder to the IRS, and five minutes later you lose five dollars and you turn around and say, "I actually lost, give me my twenty cents back," and the demon just grins at you. And if you win another dollar, he wants another twenty cents. NOW.

If gambling wins are taxed as income, then they should be treated like income--the net of WINS AND LOSSES.

King of the Bovines Feb-25-2024

Sports wager winnings aren't (usually) reportable

Only way a sports wager generates a W-2G is if the odds on the payout are greater than 299-1.

And for some strange reason, the sportsbook that I work at caps parlays at 299-1.

Huh.  What a coincidence!

Last year, we had a guy bet $5 on some golfer to lead the first round at 1000-1.  Three way tie for first paid $ $1600 and change, and since it was 333-1, paperwork had to be generated.

Only W-2G since the sportsbook opened in 2021...

Ronald Kaim Feb-25-2024

irs

Bernard Berg, I had a similar experience, not with gambling wins but selling some property. social security took the gross amount that i sold my property for instead of the net amount after taxes for my 2024 social security check.  what a bummer.

Pat Roach Mar-05-2024

A non-poker 'tell"

All of our pissing and moaning re the $1200 win triggering a W-2G makes it more obvious that most of us don't report winnings sans W-2G's!  Little wonder the 1200 is etched in stone.

Question of the Day - 25 February 2024

Comments