UK and overseas poker players competing in the World Series of Poker (WSOP) tournament and other events held in the US risk their winnings becoming subject to a 30% US tax, after an expert in gambling taxation highlighted changes to the way the Internal Revenue Service (IRS) plans to apply the rules
The change relates to rules regarding the individual taxpayer identification number (ITIN) which is required for tax exemptions. Players who make a profit of more than $5,000 (£4,013) in a US poker tournament are subject to US taxes. However, players from outside the US who live in countries that have a tax treaty with the US and who are given a ITIN are exempt from US taxes and have to settle any tax obligations with their local tax authority.
Up until now, casinos have been allowed to issue ITINs. Upon cashing in their winnings, players present their passport and a proof of residency to the hosting casino and receive their prize in full.
This means that overseas players do not have to approach the IRS to obtain an ITIN, although they do have to supply some paperwork in advance to a Certified Acceptance Agent (CCA) based in their home country.
Russell Fox, of Las Vegas firm Clayton Financial and Tax, which specialises in gambling taxation, put out a recent blog post on the topic which stated: ‘The IRS sent a major casino here in Las Vegas a letter informing them that because of a provision in the Protecting Americans from Tax Hikes Act (PATH) Act no one but the IRS can issue ITINs.’
One of the unintended consequences of that act, according to Fox, is that the elimination of all CAAs outside the US. He argues that this means international players will need to obtain or update a current ITIN well in advance of competing.
This can be a lengthy process, taking up to two months, as applicants need to send off their original documentation including items such as passports, rather than photocopies, to designated IRS offices in the US. Fox also claims that the domestic agents issuing the ITINs must be agents of the IRS, which means casinos would lose the ability to offer an ITIN on the spot.
However, Fox’s interpretation has been challenged by the WSOP organisers, among others. WSOP put out a tweet on February 15, soon after the blog post appeared, in which it stated: ‘WSOP is able to process ITINs for customers and are successfully doing so as we speak.’
