by Jean Scott, Marissa Chien & Russell Fox
226 pp. Huntington Press, 2019 $24.95
Are you participating in the Tea Party? I’m not referring to the right-leaning political group that’s been splintering Congress for the best part of the last decade, or a latter-day version of the rebellious rabble rousers who dumped bales of commercial tea into Boston Harbor a few centuries ago. I’m talking about the group who sarcastically celebrates April 15th with a “Taxpayers Eat it Again Party.” If you’re not part of that depressed group, feel fortunate. I can assure you that most of your casino customers are.
There are probably hundreds of areas of the tax law that are unfair or onerous, but, from my perspective, there are two parts that are simply outrageous. One is paying taxes on debt relief. If you go bankrupt and default on a loan or mortgage, for example, you have to pay taxes on the amount of the money that you didn’t pay on that mortgage. #@*?&!!!#?? Thankfully, the Feds and the states did grant some temporary relieve for foreclosures on homeowners caught in that Catch 22 during the debt crisis of 2008.
But the other area of the tax code that is still nuts concerns gambling wins and losses. Consider this example: You enter a casino with $100 in your pocket. You start well, hitting multiple jackpots of $1,200 or more (the threshold at which wins have to be reported to the IRS). Say you hit 10 of those on your visit. If you’re playing $5 slots, that money goes back in fast. After several hours of ups and downs, you finally go broke and leave, with a great experience and a lot of enjoyment for your $100. You may have earned some Free Play and perhaps a comp or two for later. But surprise! Before your April 15th TEA Party, you learn that, for losing $100, you now owe the IRS $3,000 in federal taxes. And maybe more in state taxes.
It can and does happen. As the authors of this classic book explain early on, when it comes to taxes owed, “you’re guilty until you can prove you are innocent.” Jean Scott has been writing books on how to get more out of your gaming visits for years, particularly with her Frugal Gambler series. Scott initially planned, in 2000, to do an article on the subject, but quickly realized the topic was broad enough that a book was needed to properly address the subject. She joined forces with enrolled tax agent Marissa Chien to publish Editions One through Three. Russell Fox, another enrolled agent, joined their team this year to produce the updated Fourth Edition.
I have testified at a few IRS hearings on behalf of customers over the years and learned, in doing so, that this subject is complicated. I have also learned that very few folks, including the IRS agents auditing you, have a good grasp of the tax laws related to gaming. Details can change year to year or with each new court ruling. You can search the internet all day long, and you can download as much of the tax code as you want, but you won’t really get that much better by yourself. This book is the single best source for information on this topic anywhere.
Despite the multiple warnings and disclaimers by both the publisher and the authors saying you should consult your tax advisor instead of relying on this book, don’t worry: you can absolutely rely on this book. Over the years, I’ve asked dozens of enrolled agents and various CPA tax advisors about this subject and generally have found that I know more about the topic than they do, since I’ve read the first three editions. Scott, Chien, and, now, Fox all know much more than I do. If you do get advice from a tax professional, urge them to read this book first.
I can give you a summary, so you don’t have to read the whole book: document everything. But this book will teach you how to, and how not to, document things and which documents to show, or not show, the IRS. The experiences of Scott on the casino floor and the expert advice from Chien and Fox on recent tax rulings, is invaluable. They are also pretty good at playing Myth Busters:
- Think you’re covered if you get an automated statement from the casino saying you’re a loser? BUSTED: you’ll learn quickly in the early chapters that using that info in the wrong way could raise your non-gaming taxes (?)
- Think filling out a log of your gaming trips on the evening of April 14th will work? BUSTED: Better read Chapter 2 now before heading off to your cell.
- Since you never got a W2G from your blackjack adventures, you don’t have to worry about anything, right? BUSTED: You could end up in the cell next to the folks with the phony logs above.
While slots and table games are the primary focus of the book, it also covers games like keno, bingo and poker, and gives updates on newer subjects like cryptocurrencies, daily fantasy sports, online gaming and the 2017 changes in the tax code.
There’s probably not a casino professional anywhere that hasn’t been asked about taxes by their players. So even if you’ve never gambled yourself (a big career mistake, by the way), you should still read this book so you can recommend it to your patrons. As I’ve said about several gaming books in the past, this book belongs on your shelf. But with this one, keep another copy or two in the office to loan to your guests as needed.
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