If you’ve ever had the misfortune of dealing with the IRS, you know it’s rarely good news. They don’t send “thanks for paying your taxes” notes or inquire about your latest vacation. Instead, their letters are typically heart-stopping, signaling potential issues with your filings. For casino gamblers, though, there’s a unique frustration with the IRS that might finally see a positive change.
The IRS and Casino Gamblers: A Long-Standing Grievance
Casino gamblers, whether on the Las Vegas Strip, in regional casinos, or aboard cruise ships, have a special beef with the IRS. You see, gambling wins are treated as income. While most people don’t keep track of every small win and loss, the IRS has a keen interest in significant wins.
For those using loyalty cards, year-end win/loss statements help, allowing them to deduct losses from their wins. But the real gripe comes with what’s known as a “hand pay” — a slot machine win of $1,200 or more.
What Happens When You Score a Hand Pay?
Picture this: you’re on a winning streak, and suddenly, the slot machine you’re playing freezes. An attendant must come to your aid, collecting your driver’s license and issuing you a W-2G form. This IRS form tells the agency about your win and obliges you to report the earnings. Sounds like a buzzkill, right?
Casinos don’t make this process any smoother. They often seem understaffed, and you can find yourself waiting ages for someone to assist you. If you’re fortunate enough to hit multiple hand pays in one session, the process speeds up slightly after the first time. However, the frustration of being forced to sit idle while waiting for an attendant remains.
A Rule as Old as Time (Almost)
Here’s the kicker: the $1,200 threshold for a hand pay hasn’t budged since 1977. That’s 46 years without an increase, leaving this figure wildly outdated due to inflation. Both players and casinos are fed up. Gamblers hate the interruption, and casinos dislike the labor it demands.
Most land-based casinos adhere strictly to these rules, as do nearly all cruise lines sailing from U.S. ports. Interestingly, MSC Cruises, a growing rival to Royal Caribbean and Carnival, does not follow this program. Technically, winnings on MSC ships are still taxable, but without a W-2G, it’s unlikely players report them.
IRS Moves Closer to Raising the Threshold
But there’s good news on the horizon. The IRS Advisory Council has recommended raising the W-2G threshold to $5,800. IRS Commissioner Danny Werfel has shown support for this change, indicating that outdated thresholds need reassessment.
“I think it’s very valuable when we get input from the taxpaying community and our Advisory Council on when thresholds may be out of date,” Werfel stated during a recent Congressional appearance. “The determination of something like that is of regulatory nature and therefore the decision rests with the Treasury’s Office.”
Bipartisan Support for Change
The push for this change has been spearheaded by U.S. Representatives Dina Titus (D-Nevada) and Guy Reschenthaler (R-Pennsylvania). They highlight that $1,200 in 1977 equates to $6,200 today.
“Because the threshold has not kept up with inflation, it has resulted in a drastic increase in reportable jackpots, which trigger tax burdens for winners and compliance burdens for casinos,” explained Reschenthaler.
“Increasing the threshold will eliminate this onerous red tape, ensuring the gaming industry can continue to support good-paying jobs and foster economic growth in Pennsylvania and across the country.”
The Light at the End of the Slot Machine
So, what does this mean for gamblers and casinos? If the threshold is raised to $5,800, it would drastically reduce the number of hand pays, making life easier for both players and casino staff. Gamblers could enjoy their big wins without the immediate hassle of IRS paperwork, and casinos could allocate their resources more efficiently.
In the end, raising the hand pay threshold isn’t just about keeping up with inflation; it’s about modernizing a dated system to benefit the industry and its patrons. Here’s to hoping this change rolls in faster than a jackpot on a lucky day!
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