Casino Taxes Regulation - Essay Example

Winnings from all types of gambling are taxable and should be declared as income on the tax return, while the losses from gambling are to be deducted as an itemized deduction for the spare time players, restricted to the number of winnings declared. Players who are professional gamblers must hold a file as a self-employed business using Schedule C. Schedule C is an Internal Revenue Service form used to file profits and losses by a company (What is Schedule C, 2011). The worth of comps received is considered as gaming winnings and is included in the total winnings. Though, the person is allowed to deduct the losses to counterbalance the income from the comps. The winnings and losses are reported only in the year of occurrence. Excessive losses are not to be carried forward or backward to balance winnings in other years. Married couples who file a joint return should combine their winning losses, and account for only one figure for both.

According to the instructions issued by IRS, lumping is unacceptable. Lumping is either reporting only one final win figure and no losses or reporting nothing if the net value from gambling is negative. A person must report the total of the winning sessions individually from the total of the losing sessions.

The Internal Revenue Service requires an accurate record to be maintained to substantiate one's wins and losses. The records must contain at least the following information: the date and type of person’s particular wager; the name of the gaming organization or establishment with its location and address; the names of the other people, if any, present with the player; the amount the person won or lost.

A report containing wagering tickets or receipts; W-2Gs; credit card records such as cash advances; canceled checks; receipts provided by the gambling establishment and bank withdrawals are also required by the IRS to substantiate a person’s diary. A person does not submit these records with a return but will be needed if the person is to be audited.

As casinos and card rooms are subjected to money-laundering rules therefore they must report cumulative cash transactions of ten thousand dollars or more in one day to the IRS. They can also make out such reports for amounts as low as two thousand dollars if they are doubtful and apprehensive. Once a casino has a person’s SSN and ID on record, they may issue these Cash Transaction Reports (CTRs) without his/her knowledge.

Though the basic rules of casino gaming taxes are almost the same for every state there are some differences as well. The revenues generated from the taxes in Nevada are used by the local governments and state general fund. In New Jersey, casino revenues provide financial assistance to the disabled and elderly (State Tax Systems: recreational gambling, 2010).

A license fee is imposed at both local and state levels. The range of County license fees is from $10 to $50 per month, whereas, the range of State monthly license fees is from 3% to 6.25% of the gross revenues. The range of Annual state license fees is from $100 to $6,000 each year depending on the size of the organization. Annually, an additional $80 fee is imposed on every slot machine for an unrestricted state license. The quarterly fee ranges from $45 to $225 plus 90 per machine for a restricted state license fee (Rafool, 2004). Annually, a $ 250 tax is imposed on each slot machine. Casino entertainment tax equals to 10% of the amounts paid for admission, refreshments, food, and merchandise (Rafool, 2004).