NTRA get backing on Withholding Changes! ~ Submit your support comment now..

[Kasept]

TREASURY AND IRS ISSUE PROPOSED REGS TO MODERNIZE PARI-MUTUEL WITHHOLDING AND REPORTING

Lexington, Ky. (December 29, 2016) - The Department of Treasury and Internal Revenue Service (IRS) today issued newly proposed regulations relating to withholding and reporting with respect to pari-mutuel winnings. The 31-page Treasury document, entitled “Withholding on Payments of Certain Gambling Winnings,” accomplishes the goals started and spearheaded by the NTRA more than two years ago. The effort to this point has included meetings between the NTRA and Treasury and IRS officials, visits to Washington by horseplayers, grass roots campaigns and direct contact involving thousands of industry stake holders, including bettors, as well as involvement by numerous Members of Congress, Governors and other elected officials.

The proposed regulations clarify ‘the amount of the wager’ to include the entire amount wagered into a specific pari-mutuel pool by an individual—not just the winning base unit as is the case today—so long as all wagers made into a specific pool by an individual are made on a single totalizator ticket if the wager is placed onsite. The proposed regulations would have the same positive results for Advance Deposit Wagering (ADW) customers and would not impact how those wagers are currently made.

The proposed regulations will positively impact a significant percentage of winning wagers, particularly those involving multi-horse or multi-race exotic wagers, and result in tens of millions of dollars in additional pari-mutuel churn.

The proposed regulations will undergo a 90-day comment period and it is conceivable that they could be in place prior to the 2017 Triple Crown. As was the case during a similar comment period in 2015 that attracted nearly 12,000 comments, the NTRA next week will establish a convenient and simple method for industry stakeholders to encourage enactment of the proposed regulations.

In its 31-page rulemaking document, the Treasury and IRS cited numerous specific examples provided by the NTRA as reasons for the need to modernize and also referred to the many comments it received from individuals in support of the proposed changes.

“This is a tremendous step forward in our ongoing efforts to modernize pari-mutuel regulations to accurately reflect today’s wagering environment,” NTRA President and CEO Alex Waldrop said. “The NTRA remains thankful to everyone who has engaged in this process, including numerous industry stake holders, horseplayers, Members of Congress, Governors and other elected officials, especially Congressmen John Yarmuth (D-KY) and Charles Boustany (R-LA), who led the congressional effort. A unified message has gotten us to this point and we encourage everyone to continue to work through the channels we will be establishing as we seek to push these proposed regulations across the goal line.”

The complete Treasury and IRS rulemaking document is posted on NTRA.com and can be accessed here.

[Kasept]

If you don't remember the basis of the change.. From Hegarty piece:

Current rules trigger tax reporting requirements if a single wager pays 300-1 or greater, while withholding is triggered if the bet pays more than $5,000 at odds of 300-1 or greater, calculated on the base unit of the wager. Under the proposed rules, the requirements would not be triggered unless the wager paid off at 300-1 or greater to the total amount bet by the player in the pool.

[Alabama Stakes]

This is enormous

[saratogadew]

Very positive news! Still a little unclear as to the effects of on site or adw regarding cave man multis and abc players.

[jms62]

Originally Posted by saratogadew

Very positive news! Still a little unclear as to the effects of on site or adw regarding cave man multis and abc players.

ABC players would be on the wrong end of it. Only in government would it take a 31 page paper to explain this.

"The proposed regulations clarify "the amount of the wager" to include the entire amount wagered into a specific pari-mutuel pool by an individual—not just the winning base unit as is the case today—so long as all wagers made into a specific pool by an individual are made on a single totalizator ticket. The proposed regulations would have the same positive results for advance-deposit wagering customers and would not impact how those wagers are currently made."

[ajphilly]

Originally Posted by jms62

ABC players would be on the wrong end of it. Only in government would it take a 31 page paper to explain this.

"The proposed regulations clarify "the amount of the wager" to include the entire amount wagered into a specific pari-mutuel pool by an individual—not just the winning base unit as is the case today—so long as all wagers made into a specific pool by an individual are made on a single totalizator ticket. The proposed regulations would have the same positive results for advance-deposit wagering customers and would not impact how those wagers are currently made."

Below is from Hegarty's DRF piece. If I'm interpreting this correctly (which I may not be), it seems like ABC players might be ok as long as they are using an ADW? Or would the IRS still take a cut and you'd have to get it back at tax time?

Under the rules, the new reporting and withholding requirements would apply only to a single ticket if the bet was placed at a physical wagering site, such as a racetrack or OTB. However, customers of account-wagering companies would be able to count all such wagers into a single pool, regardless of the number of tickets, because of the existence of a verifiable record of those wagers.

[Kasept]

Bettor-Friendly Tax Regs Nearing Reality
By T. D. Thornton

A framework of new horseplayer-friendly tax regulations that were jointly proposed by the United States Department of the Treasury and the Internal Revenue Service (IRS) on Dec. 29 could go into effect as early as April if the 31-page set of rules makes it unscathed through a 90-day public comment period.

The new regulations, titled “Withholding on Payments of Certain Gambling Winnings,” are designed to ease the burden of federal tax reporting and withholding requirements related to pari-mutuel betting.

For the better part of a decade, but most emphatically in the past two years, the National Thoroughbred Racing Association (NTRA) has lobbied hard at the federal level for such changes while recruiting a grass-roots corps of horseplayers to support the cause.

“We are going to be working over the next few days to make certain we have everything in the rule that we asked for,” NTRA President and Chief Executive Officer Alex Waldrop told TDN in a Thursday phone interview. “We think it’s there, and we will be coordinating a consistent response to the IRS and Treasury, essentially thanking them for listening to us and providing relief for the industry in the form of modernized withholding and reporting.”

According to an NTRA statement, “the proposed regulations will positively impact a significant percentage of winning wagers, particularly those involving multi-horse or multi-race exotic wagers, and result in tens of millions of dollars in additional pari-mutuel churn.”

The NTRA has long lobbied for changes to IRS code section 3402(q)(3)(c). It requires federal tax withholding if winnings of more than $5,000 are derived from bets at the reporting level, which is 300 times as large as the base amount wagered.

That rule is unfair, the NTRA has argued, because it was conceived in an era when the daily double was the industry’s most exotic bet. Horseplayers have likewise bemoaned that this standard for reporting is outdated, because these days, withholding- and reporting-triggering scores are increasingly comprised of a complex array of horizontal and vertical bets that by their very nature end up producing numerous losing wagers on the same ticket that don’t count as losses for tax purposes.

An “Explanation of Provisions” section of the proposed new regulations addresses those concerns.

“The increase in exotic betting, and in particular the use of certain methods of exotic betting, has resulted in scenarios where [the outdated] rules may result in withholding that significantly exceeds the individual gambler’s ultimate income tax liability,” the Treasury/IRS document explains. “In light of this, the proposed regulations amend the rules regarding how payers determine the amount of the wager in pari-mutuel wagering transactions… by providing a new rule to determine the amount of the wager when wagers are placed in a single pari-mutuel pool and are reflected on a single ticket.”

After years of stalled efforts to reform tax rules, the NTRA embarked upon a strategy shift in January 2015. Instead of continuing to ask for federal legislative changes to withholding and reporting, the organization decided to go straight to the Treasury, which has the power to re-interpret the tax code without changing it.

“We believe the strategy that we undertook of enlisting the support of key lawmakers…to get the attention of staffers in the Treasury department who understood our issues,” was the big breakthrough in getting the new regulations to the brink of passage, Waldrop said.

When asked if the NTRA was aware of any entities that would try to block or oppose the proposal, Waldrop said, “not that we are aware of. No one emerged in 2015 when we went through the original comment period, so we don’t anticipate any opposition.”

That original public input period drew some 12,000 comments, many of which were written by supportive horseplayers who spoke up via an online submission portal. In the coming days, the NTRA will again be getting the word out to bettors about how to submit comments for this close-to-final rules package.

Waldrop said “depending on how [the comment period] goes, if there are no objections to the rule, it could become law in as quickly as 90 days.”

Waldrop was quick to credit numerous legislators involved in the plan, but he added “it was also horseplayers” who helped to push the tax initiative to its present point.

“It was the thousands of people who submitted positive comments to the changes that we proposed.” Waldrop said. “As they say, ‘Victory has a thousand fathers.’”

[jnunan4759]

I like the way it is counted in the ADW with bets into the same pool. The ticket thing is problematic. I can see both sides. You could hit a big ticket and then go around and stoop tickets to inflate your base number.

I know at Parx, if you use your rewards card, it puts some code on the ticket. I found that out when I left a ticket in the machine and the mgr. returned it to me after she looked up my number. Not sure if any of that is uniform.

Maybe not a big deal, but maybe is.