Casinos and Poker Tournament Sponsors Face New IRS Rules

The Treasury Department and the IRS recently released a new requirement for Casinos and poker tournament sponsors. As of March 4th 2008 the new rule will take effect and the government will expect the casinos and sponsors to turn in a report of almost all winnings and winners from poker tournaments they are hosting.

The new rules were brought into fruition to clear any misunderstanding on tax reporting rules that apply to poker tournaments. There have been mix-ups in the past about who was supposed to turn in tax reports for the winnings at tournaments. Most believed that sponsors who retains the money for the players was the one responsible.

IRS Poker WithholdingsAny tournaments that take place in the year 2007 and up until March 4th 2008 will not be subject to this rule. After March 4th, the sponsor of the tournament must send in a form similar to an IRS Form W-2G to the government if winnings are more than $5,000. The new rule allows tournament sponsors to turn in the report and not pay taxes on the amount of winnings given to the winner or winners. If the sponsor chooses not to fill out the required paperwork the IRS will make the sponsor pay the tax and also fill out the appropriate paperwork. The sponsor would be required to pay around twenty-five percent of the winnings.

According to the new rule winners of poker tournaments need to turn in their tax identification number to the sponsor to help the sponsor follow the new requirements. The tournament sponsor must take out twenty-eight percent of the winnings to cover the federal income tax if a winner does not give them their number.

Regardless whether a winner wins above $5,000 or less they must report all of their money that they win to the IRS. It is a law required of an individual even if they do not receive a form from the IRS.

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