Randolph Law Firm, P.C.

IRS wants casinos to allow tracking of winnings on comp cards

Both the casinos and their customers in Nevada and elsewhere agree on one thing: the latest IRS idea to use casino comp cards to track slot-machine winning is oppressive, impractical and wrong. Because the comp cards track casino spending with mathematical precision, the IRS wants to capitalize on the technology. It would have the cards report whenever a gambler wins over $1,200.

The comp systems are sometimes called customer loyalty programs. The main casino lobby in the United States says that the IRS is trying to turn the casinos' own tool against the casinos. The association also claims that the proposal will create a logistical nightmare. It objects to having to re-engineer its product from a marketing tool into what many will view as a despised collection tool.

It's fairly common knowledge that gambling winnings are supposed to be reported as income. The convergence of tax payments with casino winnings is likely, however, a most unpopular idea. The IRS is asking casinos to beef up their reporting obligations in order to follow electronically tracked slot machine winnings. The IRS says that it will only require reporting where there is a jackpot of at least $1,200 or larger.

On the other hand, the casino groups claim that the IRS presence in the system will have a chilling effect on customers' future use of the comp cards. It's a catch-22 in the sense that the use of the cards will continue to interest the IRS in monitoring the winnings, whereas the presence of the IRS in looking for comp card winnings will cause many recipients to stop playing the slots and/or to refuse to use the cards. Furthermore, the casinos object to having to revise and re-engineer their marketing-oriented comp cards into tracking mechanisms for the tax collector. The conflict will have a clear impact on many taxpaying residents, casino owners and casino employees in Nevada

Source: pressofatlanticcity.com, "IRS wants to use casino comp cards to track taxes", Reuben Kramer, June 17, 2015

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