IRS moves closer to $5800 threshold for W2-G's

https://www.thestreet.com/travel/cruise-lines-las-vegas-strip-gamblers-get-good-irs-news

The IRS Advisory Council has recommended that the W2G threshold increase to $5,800.
IRS Commissioner Danny Werfel appeared to back such a move during a recent appearance in Congress.


How much longer till it's implemented, i don't know.
Over/Under that The new Guitar tower at former Vegas Mirage site will be completed 1st in 2027?
(RIP Mirage)

I'd rather they go for $8,000 so the $25 bettors who hit 300:1 don't get a tax form at $7,500.

I wonder on average how many slot attendants would be made redundant if this hits.

Not saying that as an argument it shouldn't happen, because it is far overdue.

To the argument that this is bad because it will make some people unemployed: If we think it's good to create work for slot attendants to manually hand out winnings, we should just make voucher print outs illegal and have all cashouts handpays. Voila: we just created thousands and thousands of new jobs and saved the economy!

I wonder how they arrived at $5,800. That number isn't even divisible by 300. Why not $6,000?

And this article only seems to talk about slot machines. Will this increase apply to table games as well if it's implemented?

Hahahahaha! And give up that $600 W-2G on 300:1 at the tables? Damn that $1 side bet on MS Stud looks stupider everytime I think about it.

They should just drop gambling taxes altogether. People will likely just spend that money on other taxable items and make up for it anyway. (That’s my theory and I’m sticking to it)

If I can’t routinely deduct the $1 I lose in a slot machine I shouldn’t have to pay taxes on a big win.

$5800, although I have no idea how they came up with it, is quite a significant improvement.

It should have been raised to $5,800 a long time ago. $1,200 was implemented in the 1970's when $1,200 was REALLY a big deal. In the 1970's, you could pay for almost an entire year's rent apartment. $1,296 was the average yearly amount in 1970. Nowadays, apartment rent is about $24,000 a year, a HUGE increase. 😵‍💫💡 So, in the 1970's, it made sense to tax starting at $1,200. In 2024, not so much. 💡

Quote: Nathan

It should have been raised to $5,800 a long time ago. $1,200 was implemented in the 1970's when $1,200 was REALLY a big deal. In the 1970's, you could pay for almost an entire year's rent apartment. $1,296 was the average yearly amount in 1970. Nowadays, apartment rent is about $24,000 a year, a HUGE increase. 😵‍💫💡 So, in the 1970's, it made sense to tax starting at $1,200. In 2024, not so much. 💡
link to original post

I think keeping the amount at $1200 will insure less cheating on taxes. The higher the number is the more people will not be reporting their wins. I think they should go to a system where player cards are required and the total win is reported to the IRS at the end of the year.

Quote: DRich

Quote: Nathan

It should have been raised to $5,800 a long time ago. $1,200 was implemented in the 1970's when $1,200 was REALLY a big deal. In the 1970's, you could pay for almost an entire year's rent apartment. $1,296 was the average yearly amount in 1970. Nowadays, apartment rent is about $24,000 a year, a HUGE increase. 😵‍💫💡 So, in the 1970's, it made sense to tax starting at $1,200. In 2024, not so much. 💡
link to original post

I think keeping the amount at $1200 will insure less cheating on taxes. The higher the number is the more people will not be reporting their wins. I think they should go to a system where player cards are required and the total win is reported to the IRS at the end of the year.
link to original post

Should a waiter only be tipped by credit card?
How about buying something from a flea market?
Should the taco stand not be permitted to accept cash?

If you are truly worried about taxes being collected the last place I’d be looking is at gamblers who actually are winners hiding big jackpots between $1200 and $5800.

The thing people don't commonly talk about is that the jurisdiction chips inside the machines are VERY time-consuming and complicated to swap out and, in some places, can only be done by the gaming commission. So they're going to still hand pay you at $1200, you just won't get a tax form until $5800.

Quote: SOOPOO

Quote: DRich

Quote: Nathan

It should have been raised to $5,800 a long time ago. $1,200 was implemented in the 1970's when $1,200 was REALLY a big deal. In the 1970's, you could pay for almost an entire year's rent apartment. $1,296 was the average yearly amount in 1970. Nowadays, apartment rent is about $24,000 a year, a HUGE increase. 😵‍💫💡 So, in the 1970's, it made sense to tax starting at $1,200. In 2024, not so much. 💡
link to original post

I think keeping the amount at $1200 will insure less cheating on taxes. The higher the number is the more people will not be reporting their wins. I think they should go to a system where player cards are required and the total win is reported to the IRS at the end of the year.
link to original post

Should a waiter only be tipped by credit card?
How about buying something from a flea market?
Should the taco stand not be permitted to accept cash?

If you are truly worried about taxes being collected the last place I’d be looking is at gamblers who actually are winners hiding big jackpots between $1200 and $5800.
link to original post

The IRS knows 99 percent of people with W2G’s are losing more than they win. The current amount is way too much paperwork for everyone for very little tax revenue

Quote: Mukke

I wonder on average how many slot attendants would be made redundant if this hits.

Not saying that as an argument it shouldn't happen, because it is far overdue.

To the argument that this is bad because it will make some people unemployed: If we think it's good to create work for slot attendants to manually hand out winnings, we should just make voucher print outs illegal and have all cashouts handpays. Voila: we just created thousands and thousands of new jobs and saved the economy!
link to original post

I don’t know for certain but I would assume when slot machines went from coin to TITO this would have eliminated a lot of jobs, change attendants, slot technicians (less moving parts), & cashiers.

Plus aren’t we still in a labor shortage anyway?

Quote: DWizard7

The thing people don't commonly talk about is that the jurisdiction chips inside the machines are VERY time-consuming and complicated to swap out and, in some places, can only be done by the gaming commission. So they're going to still hand pay you at $1200, you just won't get a tax form until $5800.
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That is not true. Every machine has a configuration menu where that amount can be changed. It would take less than 5 minutes per machine to make that change.

Quote: DRich

I think keeping the amount at $1200 will insure less cheating on taxes. The higher the number is the more people will not be reporting their wins. I think they should go to a system where player cards are required and the total win is reported to the IRS at the end of the year.
link to original post

Making this change plus taxing only net winnings for the year would be ideal. WynnBet sports book terminals in Boston require a card above a certain amount of cash in; the same could be done for slots. Unfortunately, the tax code has moved in the opposite direction lately - specific removal of carry-over losses from gambling for professional gamblers. The Feds love any revenue they can get from sin taxes, and will not easily make changes that reduce revenue in practice.

The US operates on sin taxes. Do you want me to allow this? Whether it's weed, gambling, alcohol, nicotine, etc, we must pay protection to the politicians, or lose out.

I know that name. Yeah?
- He's political. Yeah.

Quote: Deucekies

...And this article only seems to talk about slot machines. Will this increase apply to table games as well if it's implemented?
link to original post

The increase only applies to slots, not table games.

Quote: UP84

Quote: Deucekies

...And this article only seems to talk about slot machines. Will this increase apply to table games as well if it's implemented?
link to original post

The increase only applies to slots, not table games.
link to original post

Ehh? Machine threshold $5800, tables $600?

Quote: Dieter

Quote: UP84

Quote: Deucekies

...And this article only seems to talk about slot machines. Will this increase apply to table games as well if it's implemented?
link to original post

The increase only applies to slots, not table games.
link to original post

Ehh? Machine threshold $5800, tables $600?
link to original post

Yup. The proposal only amends the part of the rule dealing with slot payouts.

Quote: UP84

Quote: Dieter

Quote: UP84

Quote: Deucekies

...And this article only seems to talk about slot machines. Will this increase apply to table games as well if it's implemented?
link to original post

The increase only applies to slots, not table games.
link to original post

Ehh? Machine threshold $5800, tables $600?
link to original post

Yup. The proposal only amends the part of the rule dealing with slot payouts.
link to original post

That surprises me. Do you have a link or quote that shows that?

Quote: DRich

Quote: UP84

Quote: Dieter

Quote: UP84

Quote: Deucekies

...And this article only seems to talk about slot machines. Will this increase apply to table games as well if it's implemented?
link to original post

The increase only applies to slots, not table games.
link to original post

Ehh? Machine threshold $5800, tables $600?
link to original post

Yup. The proposal only amends the part of the rule dealing with slot payouts.
link to original post

That surprises me. Do you have a link or quote that shows that?
link to original post

https://www.congress.gov/bill/117th-congress/house-bill/6937/text

Quote: UP84

link to original post

Thank you

If the W2G limit goes over 4k, I’m playing more $1 denom VP. Long overdue change but there are many incentives for politicians to keep the $1200 threshold.

Quote: TinMan

If the W2G limit goes over 4k, I’m playing more $1 denom VP. Long overdue change but there are many incentives for politicians to keep the $1200 threshold.
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My understanding is that the IRS can set the limits themselves.
They don't need a bill to command them to do it

From the casino's perspective, is the "hand pay experience" worth the player paying taxes and having less cash on hand, or the casino paying extra staff? I think we see a significant number of new pay tables, likely a new way for casinos or slot machines to celebrate big wins, and 20% or more slot attendants lose their job. Some smaller casinos may opt for eliminating hand pays all together.

Quote: RuddyDuck

From the casino's perspective, is the "hand pay experience" worth the player paying taxes and having less cash on hand, or the casino paying extra staff? I think we see a significant number of new pay tables, likely a new way for casinos or slot machines to celebrate big wins, and 20% or more slot attendants lose their job. Some smaller casinos may opt for eliminating hand pays all together.
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No. And as the casino industry has proven time and time again is that they will get rid of unnecessary staff in an instant.

Started with Tito’s to cashless gaming in some markets. They’d love to never have to process a single hand pay ever again.

There is also plenty of incentive for casinos to lobby politicians to raise the W2G threshold. I am surprised it took this long. Me personally, I have a feeling that casinos will insist on hand paying players winning anything between $1,200-$5,800, even if they don't use any W2G forms, and force slot players to go to the cage for larger cash outs of that size as well. They could also add a feature to the machines, requiring ID or players card to cash out.

Quote: Bowler377

There is also plenty of incentive for casinos to lobby politicians to raise the W2G threshold. I am surprised it took this long. Me personally, I have a feeling that casinos will insist on hand paying players winning anything between $1,200-$5,800, even if they don't use any W2G forms, and force slot players to go to the cage for larger cash outs of that size as well. They could also add a feature to the machines, requiring ID or players card to cash out.
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Then they would have to make it so you couldn't cash in without players card.

They would most likely be violating gambling regs if they allowed you to insert cash, then refused to cash out without a players card. Some people gamble without proper ID.

As with all things $3K and up, they could rig the machines to hand pay at $3K or more and only bring the tax forms around for whatever the IRS number will be if it will be.

Quote: ChumpChange

As with all things $3K and up, they could rig the machines to hand pay at $3K or more and only bring the tax forms around for whatever the IRS number will be if it will be.
link to original post

They won't allow you to INSERT over $3k. But if you insert $2900 and win $500, that is not a handpay (except for a select few).

You can cash that out and insert at another slot however you would have to go to cashier to redeem. Redemption machines won't take it unless playing it drops back to below $3k.

Quote: ChumpChange

As with all things $3K and up, they could rig the machines to hand pay at $3K or more and only bring the tax forms around for whatever the IRS number will be if it will be.
link to original post

i can see casinos do $3k threshold for handpays to follow anti-money laundering regs

Quote: 100xOdds

Quote: ChumpChange

As with all things $3K and up, they could rig the machines to hand pay at $3K or more and only bring the tax forms around for whatever the IRS number will be if it will be.
link to original post

i can see casinos do $3k threshold for handpays to follow anti-money laundering regs
link to original post

There are no money laundering regs that I am aware of that have a $3000 cash limit. It is a common threshold used but not required.

I've heard a soundbite here or there that Canada's slot machines have a hand pay limit of a few thousand dollars, but there's no tax forms going around. It's for the anti-money laundering requirements. I don't have any real facts here.

Quote: 100xOdds

Quote: ChumpChange

As with all things $3K and up, they could rig the machines to hand pay at $3K or more and only bring the tax forms around for whatever the IRS number will be if it will be.
link to original post

i can see casinos do $3k threshold for handpays to follow anti-money laundering regs
link to original post

I thought the RICO reporting minimum in the USA was $10,000.

Quote: ThatDonGuy

Quote: 100xOdds

Quote: ChumpChange

As with all things $3K and up, they could rig the machines to hand pay at $3K or more and only bring the tax forms around for whatever the IRS number will be if it will be.
link to original post

i can see casinos do $3k threshold for handpays to follow anti-money laundering regs
link to original post

I thought the RICO reporting minimum in the USA was $10,000.
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The bank secrecy act title 31 covers cash handling for money reporting. Any cash transaction over $10k in a 24 hour period needs to be reported.

There are additional laws in place to protect against intentionally dodging the $10,000 CTR requirement. Title 31 includes procedures for transactions of $2k+, $3k+, and $5k+. However, the law is written ambiguously enough, that nobody knows how to legally handle those smaller transactions of under $10k. Any business caught enabling people to dodge CTRs and other reporting requirements, can face ginormous fines, and quite possibly criminal charges.

The problem with casinos is, that casinos have shady reasons for demanding your ID: database reporting, monitoring the win/loss records for discrepancies, scrutiny at the cage, etc.

The lower threshold rules as far as CTRs have to do with purchasing monetary instruments like money orders or cashier's checks. If you use cash over $3K to buy a monetary instrument it is reported. Otherwise, it's all about > $10K.

Other than that, what precisely are you talking about, or is this another "the CTR rule used to be $30K" misstatement?

For many years my local casino has asked for ID or your players card at a $3,000 cash out. Chips in poker room or slot tickets. That's the start of being tracked for structuring for 24 hours in the system. Don't structure and you're fine.

It's tracked when cashing out, why would these slots do anything at $3000 when you could spin that off? Just like winning a poker pot of $3,000 doesn't do anything but cashing in $3,000 chips in the poker room does.

Quote: Bowler377

There are additional laws in place to protect against intentionally dodging the $10,000 CTR requirement. Title 31 includes procedures for transactions of $2k+, $3k+, and $5k+. However, the law is written ambiguously enough, that nobody knows how to legally handle those smaller transactions of under $10k. Any business caught enabling people to dodge CTRs and other reporting requirements, can face ginormous fines, and quite possibly criminal charges.

The problem with casinos is, that casinos have shady reasons for demanding your ID: database reporting, monitoring the win/loss records for discrepancies, scrutiny at the cage, etc.
link to original post

There is a casino near me that requires a player card or ID to cash out a ticket over $1200. You have to go to the cage. You can refuse their request but I’m pretty sure you’ll 100 percent be on their radar if you do. They use this info to blacklist both advantage players and people who win.

None of that has to do with a CTR, other than maybe - getting the player’s info ready in case he passes the threshold. A CTR cannot be issued unless 10K or greater cash, in or out, or if a monetary instrument like a money order or cashier's checks is purchased with $3000. or greater cash. The latter would not apply in a casino - no one is buying monetary instruments at the casino (notwithstanding DarkOz's erroneous theory that TITOs are somehow "financial instruments").

As far as structuring and such, those might result in a SAR, which is a sort of catch all including to report those who seem to be taking steps to avoid cash reporting (CTRs).

Imprecision abounds with the lot of ye. At least you're not as bad as A.Wolf thinking a CTR is a piece of paper that may be shown off by the recipient. And then I've heard some of ye think that CTRs are issued for other than currency transactions.

If any of this matters to you, you should learn more about this. If it doesn't matter, then...it doesn't matter that you don't understand it precisely either.

ISSUE FIVE: Recommendations for Increasing the Tax Reporting Threshold for Slot Machine Jackpot Winnings Executive Summary The current threshold for tax information reporting for slot machine jackpot winnings at casinos was set at $1,200 in 1977 through Treasury regulation and has been stagnant since then. Since establishing the $1,200 threshold in 1977, inflation has decreased the value of that threshold, resulting in an increased number of Form W-2G reports filed each year. Failure to index this reporting threshold has placed an unnecessary compliance burden on the player (taxpayer), increased administrative costs for tribal (and commercial) casinos, and creates paperwork backlogs and operational burdens at the IRS. When accounting for inflation, a comparable jackpot reporting threshold today is estimated to be approximately $5,800. The IRSAC recommends raising the reporting threshold and subsequently increasing it based on inflation cost-ofliving-adjustments each year. In the alternative, the IRS should consider incrementally increasing the threshold over a period of three to five years or until such time as the threshold meets an inflation adjusted amount equal to the threshold established in 1977. Raising the reporting threshold to reflect inflation will streamline and enhance the quality of information collected and enable the IRS to focus its enforcement resources on those taxpayers most likely to have year-end net slot winnings. Finally, because this threshold was initially set by regulatory action, such a change should also be made via regulatory action.

Background Treas. Reg. § 1.6041.10 currently sets the tax reporting threshold for slot machine jackpot wins at $1,200. When a customer at a tribal (or commercial) casino wins a jackpot at a slot machine of $1,200 or more, a W-2G must be filed. The value of a $1,200 jackpot today is not the same as a $1,200 jackpot in 1977. According to the Bureau of Labor Statistics, since the implementation of this threshold (June 30, 1977) a comparable jackpot reporting threshold today would be $5,838.63.83 The IRSAC notes that H.R. 312584 was introduced in the House of Representatives on May 5, 2023, to amend the Internal Revenue Code of 1986 to increase the information reporting threshold for slot winnings to $5,000.85 The static reporting threshold has led to a dramatic increase in the number of reportable jackpots and thus the operational and labor costs of the IRS. In 2020, a year when most casinos closed for a portion of the year and reopened at significantly reduced capacity levels due to COVID-19, the IRS processed 15,842,229 Forms W-2G.86 By the IRS’s own estimates, the number of Forms W2G will increase to 18,042,600 by 2029.87 Historical data also shows this number has been increasing significantly over time, with under 9 million Forms W-2G processed in 2005.88 At the same time, most slot machine customers are in a net loss position at the end of the year. Unlike other forms of tax information reporting that report actual income, the Form W-2G reporting of a “payment” on a gross basis is different from the ultimate determination of the patron’s taxable gain or loss from slot play. Updating the slot jackpot reporting threshold to a realistic level such as $5,800 would reduce some of this W-2G “flag” reporting and help the IRS focus on forms and taxpayers associated with net gambling income at the end of the taxable year. Raising the reporting threshold to reflect inflation would not only be beneficial to IRS operations but would also ease operational burdens on the tribal (and commercial) casino operators. Tribal (and commercial) casinos bear significant labor costs and a business revenue loss because of this tax information reporting, as slot machines must be shut down and taken out of production of revenue to fulfill tax information reporting obligations. While tribal (and commercial) casino employees obtain information from slot machine customers to fill out Form W-2G, slot machines are locked down anywhere from 20 to 45 minutes. As noted earlier, there are millions of Forms W-2G sent to the IRS each year, resulting in significant lost revenue and valuable employee time. The IRSAC acknowledges that an increase in the threshold may initiate additional legislative action at the state level to address the impact to existing state statutes that are based on the W-2G threshold (i.e., debt setoff program matching). The Department of Treasury has regulatory authority to update the slot jackpot reporting threshold and has exercised such authority in the past. Treasury described this regulatory history in the preamble to the proposed version of Reg. § 1.6041.10 in 2015: “Section 6041 generally requires information reporting by every person engaged in a trade or business who, in the course of such trade or business, makes payments of gross income of $600 or more in any taxable year. The current regulatory reporting thresholds for winnings from bingo, keno, and slot machines deviate from this general rule. Prior to the adoption of the current thresholds in 1977, reporting from bingo, keno, and slot machines, was based on a sliding scale threshold tied to the amount of the wager and required the wager odds to be at least 300 to 1. On January 7, 1977, temporary regulation §7.6041-1 was published establishing reporting thresholds for payments of winnings from bingo, keno, and slot machine play in the amount of $600. In Announcement 77-63, 1977-8 IRB 25, the IRS announced that it would not assert penalties for failure to file information returns before May 1, 1977, to allow the casino industry to submit, and the IRS to consider, information regarding the industry’s problems in complying with the reporting requirements. After considering the evidence presented by the industry, the IRS announced in a press release that effective May 1, 1977, information reporting to the IRS would be required on payments of winnings of $1,200 or more from a bingo game or a slot machine play, and $1,500 or more from a keno game net of wager. On June 30, 1977, § 7.6041-1 was amended to raise the reporting thresholds for winnings from a bingo game and slot machine play to $1,200, and the reporting threshold for winnings from a keno game to $1,500.89 The amendment to Reg. § 7.6041 raising the slot reporting threshold to $1,200 in 1977 was “issued under the authority contained in section 7805 of the Internal Revenue Code of 1954.”90

Recommendations 1. Pursue addition to the IRS Priority Guidance Plan to increase the tax reporting threshold for slot machine jackpot winnings to $5,000 (modification to Treas. Reg. 1.6041-10). (Recommendations 1-2 align with SOP 4.7 – Strategically use data to improve tax administration.) 2. For calendar years beginning after the first year of a $5,000 threshold, consider periodic increases to increase the threshold to a dollar amount multiplied by the cost-of-living adjustment.

https://www.irs.gov/pub/irs-pdf/p5316.pdf pages 135 - 138 (November 2023)
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It's about the overload of paperwork hand pays are generating. This leads me to believe hand pays will rise to the new IRS levels and not be stunted at $3K if the effort is to reduce costs to the casino in terms of lost time on the machines. The IRS may take a quick route to going straight to $5,000 then adding on the multiple hundreds in the following years, or if this drags on, may just go straight to $6,000.

Quote: ChumpChange

It's about the overload of paperwork hand pays are generating. This leads me to believe hand pays will rise to the new IRS levels and not be stunted at $3K if the effort is to reduce costs to the casino in terms of lost time on the machines. The IRS may take a quick route to going straight to $5,000 then adding on the multiple hundreds in the following years, or if this drags on, may just go straight to $6,000.
link to original post

I can see others concerned about money laundering to lobby for $3k handpay threshold.
$3k is a good compromise. Ploppies would still see it as a huge increase which would make them happy and it would still lessen the paperwork by the casinos.

Personally, i just want it above $1251.
At $5 vp, any quads in db/ddb/tdb is a handpay.
At $3k threshold, i would only have 3 handpays this year instead of alot more.

Casinos are free to stunt their machines at $3K so the cage doesn't get overloaded with >$3K TITO's they have to fill out Multi-Transaction Reports on, or they could just fill out the Multi-Transaction Reports on TITO's redeemed for over $3K. It could go either way, and may go either way depending on the location. But once a major chain casino chooses a side, the others will likely follow. Right now, the cage does not want to be bothered with Multi-Transaction Reports from single TITO's.

Quote: 100xOdds

Quote: ChumpChange

It's about the overload of paperwork hand pays are generating. This leads me to believe hand pays will rise to the new IRS levels and not be stunted at $3K if the effort is to reduce costs to the casino in terms of lost time on the machines. The IRS may take a quick route to going straight to $5,000 then adding on the multiple hundreds in the following years, or if this drags on, may just go straight to $6,000.
link to original post

I can see others concerned about money laundering to lobby for $3k handpay threshold.
$3k is a good compromise. Ploppies would still see it as a huge increase which would make them happy and it would still lessen the paperwork by the casinos.

Personally, i just want it above $1251.
At $5 vp, any quads in db/ddb/tdb is a handpay.
At $3k threshold, i would only have 3 handpays this year instead of alot more.
link to original post

Won't someone think of the children??

$4001+ means 5 coin $1 royals are unencumbered with such troubles. ($1251 just isn't enough, IMO.)