The World Series of Poker (WSOP) has announced changes to its individual tax filing procedure that will be implemented for the 2015 tournament, and the adjustment could have significant impact on those who back players.
The game’s most prominent competition says it will only provide IRS form W2-G to players winning more than $5,000 as it’s required to do so by law.
The difference comes by way of form 5754, a filing document furnished to groups who share in the cost of buy-ins and also share the winnings. The WSOP says it will not give 5754 to groups, as it’s the committee’s view “that the ‘winner’ is unambiguously the individual that participated in the tournament.”
Few topics are more stressing, complicated, and downright dreadful than that of taxes, especially in the United States. Though Caesars, parent company to the WSOP, says its interpretation of the tax code is correct, others tell a different story.
A poker fan on Twitter posted a response he received from the IRS regarding form 5754. Kevin, known as “hoodskier” on the social media site, asked the governing revenue service if a casino is required to issue form 5754 when groups support a single poker player by splitting the buy-in.
The IRS responded, “As you realize per the instructions to form 5754, you must complete Form 5754 if you receive gambling winnings either for someone else or as a member of a group of two or more people sharing the winnings, such as by sharing the same winning ticket. The information you provide on the form enables the payer of the winnings to prepare Form W2-G, Certain Gambling Winnings, for each winner to show the winnings taxable to each.”
Or in layman’s terms, yes, the casino is required to produce form 5754 to groups sharing winnings.
WSOP Defends Structure
Although the IRS response seems to assert that 5754 is a necessity, the WSOP points to its terms and conditions to support its position. Included in the fine print is the line that “no teams, substitutes, transfers, or assisted play will be permitted.”
“No teams” ultimately correlates to only one legal winner, excluding the WSOP from providing 5754. The terms go on to say that backers are “the beneficiary of a speculative financing arrangement or partnership agreement.”
Of course, groups will still collaborate to support the high buy-ins that come with potentially huge payouts. The only difference is that the pact will be responsible for appropriately filing their taxes to lessen the player’s total income and ultimately reduce his or her tax liability.
World Wide Web
Taxes stemming from the game of poker are some of the most complex filings in the world, as players from 100 countries are expected to descend on Vegas later this month for the 46th Annual WSOP, and nearly all of those governments will want a piece of any player’s take.
Martin Jacobson, last year’s Main Event champ, was able to enjoy all $10 million of his winnings as he lives in the gambling tax-free city of London. Had he maintained residence in his native Sweden, he would have been forced to pay 56 percent to the government.
As with any tax or law advice, we highly recommend you discuss your specific situation with a professional.