Following an executive order of President Trump, The American Gaming Association, through its Chief Executive Officer Bill Miller, has requested the American government to increase the current jackpot tax reporting threshold. The order, which was issued on May 19th 2020, called for individuals to identify opportunities of regulatory reforms that will facilitate economic growth and job creation. Miller cited reasons why the threshold should be raised, and seeing how his request has garnered support even among politicians, a lot of people seem to agree with him.
Bill Miller’s Request
Bill Miller asked the government to modernize its regulatory reform by raising the current jackpot tax reporting threshold to at least $5000. The current threshold stands at $1200. In simple man terms, what this means is, if a player cashes out a jackpot payout of $1200 or more, machines have to be taken out of production until they complete filling a W-2G tax reporting form. According to Miller, this regulation is outdated. Gaming fans and leaders agree as the $1200 threshold was instituted 43 years ago in 1977.
Reasons For An Increased Threshold
Miller made several compelling arguments that clearly show how reporting obligations for $1200 jackpot burden the gaming industry and the Internal Revenue Service. For starters, slot machine jackpots have increased over the years. Most big tournaments easily offer payouts of $1500 and above. All these payouts require tax reporting, which causes delays as guests cannot play slot games until all tax forms are completed. Secondly, casinos now have to accommodate and bankroll the increased person to person contact between their employees and casino patrons.
Thirdly, given the many payouts that amount to $1200 and above, casinos are directing a tonne of tax documents at the end of every taxable year to the Internal Revenue Service, a department that is not only under-budgeted but also understaffed. Additionally, if one was to factor in inflation, a threshold of $1200 in 1997 is equivalent to one of $5000 in 2020. This is because inflation has devalued money.
Benefits Of Raising The Threshold
The first and obvious benefit of raising the threshold is increased activity, and consequently, more revenue generation as the delays will be fewer. Person to person contact on casino floors will also be reduced. Furthermore, a $5000 threshold will allow the IRS to focus its already limited resources on players who have the best chances of garnering net slot winnings at the end of a taxable year.
Bill Miller, president of the AGA, had previously made a similar request. On February 16th, 2019, he wrote a letter to the 116th Congress, hoping they would make it one of their priority agendas. He encouraged the Department of Treasury to update the threshold. His request was, however, unsuccessful. We are yet to see whether the reform will push through this time around, but the truth is, it is long overdue. By raising the threshold, the government will be lifting significant compliance burdens on the gaming industry and the IRS.
