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IRS Updates Information on Reporting of Gambling Winnings

IRS Updates Reporting of Gambling Winnings to Reflect Law Changes

The Internal Revenue Service has updated information on 2011 Form W-2G (Certain Gambling Winnings), related to gambling and backup withholding, to reflect recent law changes.  

In a website posting, the IRS advised taxpayers that under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Pub. L. No. 111-312), enacted December 17, the 25 percent gambling withholding rate (33.3 percent on certain non-cash payments) will remain unchanged for 2011, and the backup withholding rate remains 28 percent for 2011.  These rates, however, do not match information on the 2011 Form W-2G and the instructions for Forms W-2G and 5754, which were printed before the law was signed.

Form W-2G is used to report gambling winnings and any federal income tax withheld on those winnings. Tribes that own a casino are subject to the Form W-2G reporting requirements. Whether the tribe hires a management company to run the gaming operation or runs the operation itself, the tribe itself, as the owner, is responsible for ensuring the maintenance of all books and records used to determine gross and net income, and to determine information reporting responsibilities, including IRS Form W-2G.

The requirements for reporting and withholding gambling winnings depend on the type of gambling, the amount of the gambling winnings, and generally the ratio of the winnings to the wager.

Details of the Form W2-G changes, along with other alerts and links to updated IRS forms, instructions, and publications are available at www.irs.gov/formspubs/article/0,,id=109875,00.html.

Information on Form W2-G is available at www.irs.gov/w2g

For additional information on reporting requirements for Indian tribal casinos, see the IRS’ Gaming Tax Law and
Bank Secrecy Act Issues for Indian Tribal Governments”