WSOP Clarifies Position on IRS Tax Form for Backers
Posted on: May 12, 2015, 03:28h.
Last updated on: May 12, 2015, 03:42h.
The World Series of Poker is one of the world’s largest gambling events, and with lots of money changing hands, there’s also a lot of paperwork to be done when it comes to assigning winnings and figuring out who is responsible for paying taxes.
But players say that the WSOP could make the process a whole lot smoother if they were only able to use an IRS form that Caesars refuses to accept at the tournaments.
Over the past week, poker players have been drawing attention to IRS Form 5754, one many say they would like to use at the WSOP.
That form allows for groups to legally split gambling winnings that will then have to be reported to the IRS, and also allows portions of those winnings to be withheld for tax purposes from all members of the group, rather than just the primary winner.
Form Best Known for Use by Lottery Winners
This form is often used by lottery winners who were part of a syndicate, office pool, or other group that promised to share in the winnings if any of their combined tickets hit a jackpot.
However, it could also be helpful for poker players who are being backed in a tournament, as it would allow everyone to easily share in the tax burdens of large cashes, greatly simplifying reporting to the government.
But that’s not how the WSOP sees things. During the tournament series, winners who hit the $5,000 winnings threshold for reporting fill out a W2-G form, which reports those winnings to the IRS.
That means that the WSOP will only withhold taxes for the winner, and won’t get involved in helping to manage to tax burdens and responsibilities for any of their backers.
That’s something that has bothered many players in recent years, and in the past week, some have tried to bring the issue to the WSOP’s attention in the hopes of changing the policy.
One player, known as “hoodskier” on the Two Plus Two forums, requested information from the IRS and then sent a tweet to WSOP officials asking for a response.
Caesars Says Form Isn’t Appropriate for WSOP
While the IRS response seemed to suggest that the casino should cooperate with players using Form 5754, Caesars posted a response on the WSOP.com forum that explained why they feel that the form isn’t appropriate for their tournaments.
In particular, they said that because poker involved skill, it isn’t the same as sharing in the proceeds of a lottery tournament.
“[In the situation of] a group of people sharing a winning ticket, the ultimate winnings were not dependent on the skill and talent of the person receiving the winnings,” the statement read. “By contrast, an individual that provides the front money for a poker player is less the winner of a poker tournament (requiring a W2-G) than the beneficiary of a speculative financing arrangement or partnership agreement, which necessitates different filing requirements with the IRS.”
The statement also points out that because teams are not allowed to play in the WSOP, and because prizes awarded are officially nontransferable, the WSOP cannot recognize more than one “winner” for each prize.
Ultimately, the WSOP didn’t offer any specific suggestions about how players should approach backing agreements in the absence of using Form 5754.
However, they did end their statement with the best possible advice for any complex tax situation.
“Players are advised to consult their tax advisors to determine the best course of action that suits their individual circumstances,” the statement concluded.
Related News Articles
Related News Articles
- September 19, 2020 — 28 Comments—
- September 25, 2020 — 14 Comments—