Casinos say proposal for reporting IRS winnings unworkable

WASHINGTON — When the Internal Revenue Service floated the idea of lowering the threshold for tax-reportable winnings from slot machines, the reaction from thousands of gamblers was a collective “Give us a break!”

At an IRS public hearing Wednesday, the comments were a bit more formal. But a handful of casino executives, industry officials and tribal representatives delivered much the same message.

Geoff Freeman, president and chief executive of the American Gaming Association, told a panel of IRS and Treasury Department officials the proposal is “far more complicated, onerous and unproductive” than the government may have understood.

Freeman said the change won’t necessarily bring in a lot more money to the government but it would create a big burden “for everyone involved, including the IRS.”

“The reduction in the reportable threshold could have a devastating effect on our business, and we strongly oppose the decrease,” added John Canham, vice president of casino operations at Hollywood Casino at Kansas Speedway, a property of Penn National Gaming.

The IRS has proposed lowering from $1,200 to $600 the amount at which casinos must report winnings for individuals who hit jackpots at slots and bingo, and must supply the winner with a W2-G tax form. The keno threshold presently at $1,500 also could be reduced.

The agency said the change would bring gaming in line with other industries where payments of $600 or more to individuals in a given year triggers a tax reporting requirement and a W2-G.

But David Bean, a councilman for the Puyallap Tribe that operates casinos in Tacoma, Wash., said if the agency’s idea was to simplify tax reporting, they got it all wrong.

“It’s as if these regulations were drafted in a vacuum by someone who has no idea about the gaming industry and how it operates,” Bean said.

When a slot machine hits a jackpot, it locks up until the required paperwork can be filled out and the device reset.

Canham said the number of lockups would increase 300 percent to 500 percent if the reportable payout is dropped to $600, with the delay costing the casino a dollar each minute the slot machine is out of service.

He said casinos would end up needing to add floor staff, who would be spending an increasing amount of their time attending to the machinery and jackpot transactions.

“The IRS would be flooded with these W-2Gs,” Canham said. “If the idea was not to increase paperwork this would not be the way to go.”

Greg Mullally, a gaming industry consultant, said the regulation may not be that big of a stretch.

“Most casinos that have high roller rooms are doing what they say they can’t do, right now,” Mullally said.

Gamblers who wager at a high stakes slot machine can routinely win payouts of $2,000 or more, but “The Bellagio doesn’t have a change girl sitting in that person’s lap giving him a W2-G every time they pull the handle,” he said. Rather the gambler logs in to a player tracking device to record the win and unlock the machine.

“Utilizing new technology it is possible to track every play by every player, every coin in, every coin out, every jackpot,” Mullally said. Coming soon, he added, are slot machines programmed to spit out W2-Gs automatically.

“It is possible to do what the IRS wants to do,” he said. “That technology is available where we can track the play. It is not something that is onerous or particularly expensive.”

Freeman, who spoke following Mullally, said the consultant’s view “fails to understand the casino marketplace in its current form.”

Utilizing electronic player tracking for tax purposes raises a host of red flags, Freeman said. Not the least of those is that many gamblers would reject the use of player loyalty cards – a key marketing tool for most casinos — if they thought they were being turned into tax collection devices.

“The customer would walk away,” Freeman said in an interview after the hearing. “This would have enormous implications not just for loyalty cards in the casino industry but in the broader hospitality industry – hotels, airlines and others.”

Freeman suggested to federal officials that if anything, electronic player tracking for taxes be made voluntary for casinos and their customers. Some gamblers might welcome an IRS-accepted accounting of amounts won and lost in calculating their annual tax returns.

Rochelle Hodes, a U.S. Treasury attorney listening to the testimony, asked what the response might be to such a voluntary reporting system.

“A small percentage of gamblers may participate,” Bean said. “I come across many gamblers. Some are excited to participate in these player reward tracking programs and some are like, ‘No, it’s my business. Don’t worry about what I gamble here.’”

Contact Review-Journal Washington Bureau Chief Steve Tetreault at stetreault@reviewjournal.com or 202-783-1760. Find him on Twitter: @STetreaultDC.

Business
Auto repair shortage affects Las Vegas
The auto repair industry is facing a national shortage of workers.
Franchising industry booming
Experts say Las Vegas is a hotbed for the franchise industry.
Africa Love owner talks about his store in Las Vegas
Mara Diakhate, owner of Africa Love, gift and decor store, talks about his store in Las Vegas. (Bizuayehu Tesfaye/ Las Vegas Review-Journal) @bizutesfaye
Developer gets approval to build homes at Bonnie Springs
The Clark County Planning Commission has approved a plan to build 20 homes on the site of Bonnie Springs Ranch. (Michael Quine/Las Vegas Review-Journal)
Dig This opens new location In Las Vegas
Remember when you were a kid and played with construction toys in the sand box? Dig This Las Vegas has the same idea, except instead of toy bulldozers, you get to play with the real thing. (Mat Luschek/Review-Journal)
Town Square developer Jim Stuart building again in Las Vegas
Las Vegas’ real estate bubble took developers on a wild ride, something Jim Stuart knows all too well. (Las Vegas Review-Journal)
Salon opens at Veterans Village
T.H.E. Salon, owned by Nicole Christie, celebrated their opening at the Veterans Village with a ribbon cutting ceremony.
Southwest Airlines considering Las Vegas-Hawaii flights
Southwest Airlines CEO Gary Kelly says the airline is "very focused" on Hawaii. Hawaiians have a strong presence in Las Vegas.The city’s unofficial status is “Hawaii’s ninth island.” In 2018, at least 2,958 people from Hawaii moved to Nevada. Of those, 88.7 percent moved into Clark County, according to driver license surrender data. According to the Las Vegas Convention and Visitors Authority, 310,249 people came to Las Vegas from Hawaii in 2018.
Fewer Nevadans are celebrating Valentine's Day
Fewer Nevadans are celebrating Valentine's Day. About 1.2 million Nevadans are expected to celebrate this year, a 5 percent drop from 2018. A growing number of people consider Valentine’s Day over-commercialized. Others weren’t interested in the holiday or had nobody to celebrate with. But spending is expected to rise. Those who do celebrate are buying for more people. The average American is expected to spend about $162 this year for Valentine’s Day, a 57 percent jump from a decade prior. Katherine Cullen, director of industry and consumer insights at NRF
Foreclosures of mansions in Las Vegas
Las Vegas was ground zero for America's foreclosure crisis after the housing bubble burst. (Eli Segall/Las Vegas Review-Journal)
Rick Helfenbein talks about the impact of tariffs on the clothing industry
MAGIC fashion convention showcases men's clothing trends
The MAGIC fashion convention has come to Las Vegas at the Mandalay Bay Convention Center to showcase some of the hottest clothing trends for men. (Nathan Asselin/Las Vegas Review-Journal)
Allegiant Air flight attendants learn how to handle a water landing
Field instructor Ashleigh Markel talks about training prospective flight attendants for Allegiant Air getting live training with a raft for a water landing at the Heritage Park Aquatic Complex in Henderson on Monday. (John Hornberg/Las Vegas Review-Journal)
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery speaks
Smith & Wollensky CEO Michael Feighery speaks about the new Smith & Wollensky restaurant coming to the Grand Canal Shoppes at The Venetian in Las Vegas.
Smith & Wollensky CEO Michael Feighery talks about Las Vegas return
Michael Feighery, CEO of Smith & Wollensky Restaurant Group, discusses the restaurant's upcoming return to the Las Vegas Strip.
Apartments to Come to Hughes Center
Developer Eric Cohen discusses his current building project at the Hughes Center office park in Las Vegas, Thursday, Jan. 31, 2019. Caroline Brehman/Las Vegas Review-Journal
Stratosphere to rebrand to The STRAT
The Stratosphere, a 1,150-foot-tall property in Las Vegas will be renamed The STRAT Hotel, Casino and Skypod.
Local designers’ picks for the Las Vegas Market
The trends that local interior designers are noticing at the Las Vegas Market this year. (Rachel Aston/Las Vegas Review-Journal)
Trends in bath products at Las Vegas Market
Camille Herd, the showroom manager for European Bath Kitchen Tile & Stone, talks about the popularity of free-standing bath tubs. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Kitchen trends at Las Vegas Winter Market
Las Vegas Winter Market displayed kitchen trends that mirror common dining accessories at Strip eateries. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Emerging trends in gifts at Las Vegas Market
Julie Smith Vincenti, curator for the First Look showroom tour on gifts and lifestyle, talks about the emerging trends in those categories for this season. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
Las Vegas house prices are rising
Southern Nevada home prices were up 12 percent year-over-year in November.
Caesars Republic Scottsdale
Caesars Entertainment Corp. is building its first non-gaming hotel in the United States in Scottsdale, Arizona. (Caesars Entertainment Corp.)
Interior designer Mikel Welch talks about trends for Las Vegas Market
Interior designer Mikel Welch, who also is the on-camera designer for TLC’s Trading Spaces, discusses the trends he sees for the 2019 Las Vegas Winter Market. (Rachel Aston/Las Vegas Review-Journal) @rookie__rae
SHOT Show 2019: MEGGITT Virtual Training
MEGGIT showcases its virtual training system at SHOT Show 2019 in Las Vegas.
MGM delivers 700 meals to TSA workers at McCarran
Chefs at Garde Manger at Mandalay Bay provided 700 meals to federal employees who are affected by the government shutdown. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
SHOT Show 2019: A "nonsemi-automatic” weapon
Brandon Dunham of Nevada-based Franklin Armory show off the company’s new rifle prototype it calls a “nonsemi-automatic” weapon. The gun does not use a gas system to fire.
Las Vegas-based concrete repair company knows how to beat the heat
ART Concrete Solutions, a Las Vegas concrete-repair firm, addresses the challenges of construction in the extreme heat and sun of Las Vegas. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
Las Vegas based company brings color to concrete in the desert heat
Semco Modern Seamless Surface, a Las Vegas surface engineering company, knows how to put color in concrete construction in the Vegas heat. (K.M. Cannon/Las Vegas Review-Journal) @KMCannonPhoto
ad-high_impact_4
TOP NEWS
News Headlines
Home Front Page Footer Listing