IRS Slot Win Tax Threshold Increase Recommended By Service

Article ByDavid Weir

February 20, 2024

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Posted in: Federal Gambling News, Nevada Gambling News, Pennsylvania Gambling News, US Casino News, US Gambling News

U.S. Congresswoman Dina Titus (D-Nevada) has been attempting to get the slot winnings tax threshold raised since 2015.

This week, her efforts received a boost, as the Internal Revenue Service’s Advisory Council has come out in recommendation of the move.

Titus and 24 other congressional members want the tax threshold for slot winners raised to $5,000 from $1,200.

The last time the level changed was in 1977. At that time, gambling in the U.S. was only legal in Nevada casinos.

Today, the IRS Advisory Council recommends changing the threshold to $5,800 in order to account fully for inflation.

Titus and the other backers of the change say that not only will this save winning gamblers tax payments, but casinos will save on bureaucracy.

Currently, any win of more than $1,200 results in the shutdown of a machine for anywhere up to an hour while an attendant is called and the appropriate forms are submitted for tax purposes.

Specifically in the booming Las Vegas market, wins o more than that amount are a regular daily occurrence on casino floors.

Bipartisan Backing

The policy change is backed by a group of cross-party politicians in Washington called the Congressional Gaming Caucus.

Titus is a cochair of the group, alongside Representative Guy Reschenthaler (R-Pennsylvania).

The 24-member group signed an open letter to IRS Commissioner Danny Werfel this week, asking it to take up its internal panel’s recommendations.

“We urge you to follow the IRSAC’s recommendation and exercise your authority to raise the threshold for slot machine jackpot winnings to $5,000, and to consider periodic increases to the threshold based on inflation,” the letter said.

“Taking this action will align with the IRS initiative to strategically use data to improve tax administration and modernize tax reporting for our constituents.”  

The American Gaming Association also came out in support of the IRS Council’s decision.

“The antiquated slot tax threshold creates unnecessary burdens for consumers, casino operators, and the IRS,” American Gaming Association (AGA) President and CEO Bill Miller said.

“The AGA commends Representatives Reschenthaler and Titus and other Congressional leaders for their dedicated efforts to modernize this long-outdated policy.”

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IRS’ Decision

Previously, Titus and Reschenthaler have tried to push a bill through Congress on this matter.

Titled the SLOT Act, it failed to gain much interest from other lawmakers in the nation’s Capitol, and didn’t pass the House committee stage.

The AGA also tried to unsuccessfully enlist Donald Trump on the issue in 2020, during the then-President’s rescinding of many pandemic restrictions.

None of that will matter if IRS Commissioner Werfel now decides to implement the change anyway.

Although it is an official part of the IRS, the Advisory Committee is just that – advisory.

It was established to encourage discussion and better tax policy via talks between stakeholders, including lawmakers, taxpayers, and the agency itself.

The council suggested that this particular piece of the tax code could be updated in line with inflation every few years to avoid a 45-year lag between the threshold and the rate of rising prices.

Titus is hopeful Werfel will take up the recommendation, as she believes he was previously waiting to see if the situation would change through legislation.

“I feel like having the bill out there has been part of the reason he hasn’t made the change. But now, the commission has encouraged him to,” she said.