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CCH® PAYROLL — 9/17/07

Poker tournament sponsors told of withholding, reporting duties

The IRS has informed poker tournament sponsors, including casinos, of their withholding and information reporting obligations under Code Sec. 3402(q) for amounts paid to tournament winners. Withholding is required where one or more tournament winners are paid in excess of $5,000 apiece over the entry and "buy-in" fees that participants are charged and that comprise a "wagering pool" from which the winnings are paid. The withholding rate is equal to the third lowest rate applicable to single filers, under Code Sec. 1(c), which currently is 25 percent.

A sponsor required to withhold on poker tournament winnings must file a Form W-2G, Certain Gambling Winnings, with the IRS on or before February 28 (March 31 if filed electronically) of the calendar year following the calendar year in which the winnings are paid. Certain information to be used by the sponsor when completing Form W-G must be supplied by the recipient of the winnings on Form W-2G or Form 5754, Statement by Person(s) Receiving Gambling Winnings, whichever is applicable. (CCH comment: Form 5754 is used where the recipient of the tournament winnings is not the actual winner or is a member of a group of two or more winners on the same winning ticket.) (Rev. Proc. 2007-57, I.R.B. 2007-36, 547, September 4, 2007.)

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