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Tax

Five-Card Withhold ’Em

november 2007
On the heels of a Tax Court decision that held a poker tournament to be a wagering activity subject to IRC § 165 gambling loss limitations (Tschetschot v. Commissioner, TC Memo 2007-38, appeal pending in Eighth Circuit, filed 9/7/07, docket no. 9498-03), the IRS has issued a revenue procedure specifying that casinos and other sponsors of poker tournaments must report winnings of more than $5,000 and withhold 25% tax. The IRS will waive liability for additional tax or additions to tax for withholding violations under the section, provided that tournament sponsors meet all information reporting requirements. Rev. Proc. 2007-57 is effective for payments made on or after March 4, 2008.

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