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.
