Monthly Archives: October 2024

The Treasury Inspector General for Tax Administration (TIGTA) released Report Number:  2024-300-064 on September 30, 2024 Titled The IRS Could Collect Over a Billion Dollars in  Taxes From Unreported Wagering Income where they discussed that the IRS has not enforced income tax return filing requirements for recipients of millions of Forms W-2G, Certain Gambling Winnings, reporting billions of dollars in gambling winnings.  

TIGTA reviewed all Forms W-2G issued to individual taxpayers during  Tax Years (TY) 2018 through 2020 (as of March 2023) and found 148,908 individuals who were issued Forms W-2G with a total amount of more than $15,000 per individual in gambling winnings and did not file a tax return.  

These Nonfilers Were Associated With Approximately
$13.2 Billion In Total Gambling Winnings.

Further TIGTA analysis determined that 139,045 of these nonfilers were included in the IRS’s nonfiler case creation process inventory.  

In response to our audit work, the IRS analyzed 17,436 TY 2018 high-income nonfilers with total positive income greater than or equal to $100,000 and calculated that it could potentially increase tax revenue by approximately $1.4 billion through addressing the 139,045 individual nonfilers with gambling winnings.  

In addition, hundreds of Forms W-2G do not include a Taxpayer Identification Number (TIN) required to trace the income to the recipient.  

Finally, the IRS has few processes in place to identify potential excise tax noncompliance by entities accepting wagers, particularly in emerging areas such as online sports wagering. 

TIGTA recommended that the Commissioner, Small Business/ Self-Employed Division:  

1. Begin appropriate enforcement actions for nonfilers with gambling winnings from TYs 2018 through 2020; 
2. Review nonfilers with gambling winnings for TYs 2018 through 2020 who were not identified by the IRS’s nonfiler system; 
3. Analyze Forms W-2G with missing TINs to determine what forms of wagering and/or gambling institutions may be noncompliant; 
4. Expand the wager codes to specifically include sports betting; and 
5. Conduct an environment scan of the current and potential future conditions of the sports betting and online gambling industries.   

The IRS agreed with three recommendations and plans to begin enforcement action, if appropriate, and scan the conditions of the sports betting and online gambling industries.  

However, the IRS disagreed with analyzing Forms W-2G with missing TINs to determine what forms of wagering and/or gambling institutions may be noncompliant.  Lastly, the IRS partially agreed to explore the potential productivity and feasibility of expanding the wager codes. 

Read more at: Tax Times blog

Only 90 days remain to ensure your business complies with the Corporate Transparency Act (CTA). 

As we stated in our post Prepare Now For New Beneficial Ownership Reporting Requirements, where we discussed Starting January 1, 2024, many business entities will be required to report information to the U.S. government about who ultimately owns or controls them, including the business’ owners and officers. This new beneficial ownership information (BOI) reporting requirement is part of the Corporate Transparency Act (CTA), which aims to help law enforcement combat financial crime and protect the U.S. financial system from bad actors.

When is the deadline to comply?

A reporting company created or registered to do business before January 1, 2024, will have until January 1, 2025, to file its initial beneficial ownership information report. A reporting company created or registered on or after January 1, 2024 and before January 1, 2025 will have 90 days to file.

What are the penalties for non-compliance?

Penalties for non-compliance can be significant, resulting in criminal or civil fines and/or imprisonment. Not filing reports timely can result in a $500 per day penalty, up to $10,000, and imprisonment of up to two years.

Where can I learn more?

For more information, visit the beneficial ownership information (BOI) and Frequently Asked Questions.on the U.S. Department of the Treasury’s Financial Crimes Enforcement Network's (FinCEN) webpage. 

Read more at: Tax Times blog