US Withholding tax - a little good news

[OzGary]

At the WSOP in 2006 I had a lengthy meeting with Harrah's vice-president of Finance, Kevin Ordsman, about certain issues connected with the withholding of tax from tournament prizemoney for non-treaty countries. In my professional view the legislation was, at best, ambiguous as to what the 30% should be withheld on. The legislation required the 30% to be calculated on "winnings" and it had always been the practice that any prizemoney was considered winnings. My argument was that winnings should be determined after the deduction of the tournament entry fee.After a number of meetings and follow-ups with Harrah's lawyers and the IRS I can now announce that I have won the argument.Commencing with this WSOP all witholding tax is being calculated on the net winnings from a tournament rather than the gross proceeds. After the application of the $5k exemption this will mean that a great deal of the smaller prizes won by non-treaty country players will now not be taxed at all.For example, if a player entered a $10k tournament and received say $14k in prizemoney he was previously taxed $4200 being 30% of the $14k. Now only the $4k profit is subject to tax and as this is under the $5k exemption amount no tax is witheld. If the prizemoney was $16k then $1800 would be withheld.Avoiding this withholding altogether or getting a subsequent refund of the withholding is another subject altogether but it is something I may be able to help players with on a professional basis. If you win prizemoney above the exempion threshhold you should contact me before collecting it.CheersGary Benson

[The Croat]

Gary Benson for President

[Strong Play]

This is indeed fantastic news.Kudos to you Gary for yet another service to the Australian Poker community.And wp on your cash in the Stud8/O8 tourney.Best of luck for the remainder of the series.SP.

[Andre28]

nice one!

[thkcduckworth]

Gary - this is the greatest news every Australian poker player has ever heard . . . and definately needed.Thanks for sorting this all out for everyone; and hopefully it pays dividends in todays limit omaha-8 event!!

[luckyshades]

Gary, are you able to advise us a little bit about the process at the RIO for obtaining an ITIN ?? Is a passport sufficient to obtain this document ??

[yoyo]

Congrats Gary on winning a battle in the war against this crazy tax rule. I now luckily have a EU passport, but just out of interest, I assume from your description Harrahs only treats it on a tourney by tourney basis correct? i.e. Let's say I buyin to $25,000 worth of Harrah's WSOP tourneys, and bust out in all by the Main Event, where I place for $25,000. They still withhold the tax on the $15,000 "winnings"?

[pnw alias3]

I'm not sure this is "the greatest news every Australian poker player has ever heard". Better news would be that we now have a tax treaty with the US on gambling income.Can someone explain how the countries that have a treaty have them? How do we not have one when the likes of Latvia, Lithuania, Slovenia and Tunisia do? I have a passport with an EU country, although not one listed on IRS Income Code 28, so where do I stand?And LOL @ being taxed on your whole profit, rather than just the profit after the 5k exemption! So you win 5k, you pay no tax. But win $5001, and you pay $1500 in tax !!! Doing the math, whether you win $5000 or $7143, you still end up with $5000.

[thret]

Given that the majority of touranment cashes will be in the ME, and just into the money, this is a significant saving across the board. Everyone

[thkcduckworth]

OK, so its probably not the greatest news an Australian poker player has heard, but its pretty darn good dont you think?Agree with you that its funny you get taxed on the 5001 but not the 5000 - but at least its some progress for now.