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AGA appeals for reform of jackpot tax reporting threshold

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The American Gaming Association (AGA) has urged the US government to raise the slot jackpot reporting threshold, which requires machines to be temporarily taken out of production while large jackpot winners complete a tax reporting form.

The threshold is currently set at $1,200, above which a player must complete the W2-G form, as has been the case since it was introduced in 1977.

Bill Miller, president and chief executive of the American Gaming Association, said raising the threshold was particularly important as casinos across the US reopen following the novel coronavirus (Covid-19) pandemic, which caused all casinos across the country to close.

“As the gaming industry safely reopens and seeks to return to financial health, one critical area of regulatory reform the administration should consider is modernizing the $1,200 slot jackpot reporting threshold, which has been in place since 1977,”  Miller said.

“The current threshold is outdated and imposes significant compliance burdens on both the Internal Revenue Service (IRS) and the gaming industry.”

The appeal follows an executive order from the Trump administration, which said that federal agencies should address the economic consequences of the pandemic by, “rescinding, modifying, waiving, or providing exemptions from regulations and other requirements that may inhibit economic recovery”.

The AGA noted that, if the threshold had kept up with inflation, it would be set at more than $5,000 today and said that keeping the figure static has led to a “significant increase” in the number of reportable jackpots.

Last year, the AGA lobbied David Kautter, assistant secretary for tax policy at the Department of the Treasury, to raise the limit, but its efforts proved unsuccessful. The effort was supported be Representatives Dina Titus of Nevada and Darin LaHood of Illinois.

However, Miller said it was more important than ever now to increase the limit because issuing these forms would create a close interaction in which the virus could spread.

“The increased threshold would not only enable the IRS to focus its limited enforcement resources on those taxpayers who are most likely to have net slot winnings at the end of the taxable year, but would also significantly reduce close interactions required between gaming employees and patrons to issue tax forms,” he said.

“This policy change, supported by bipartisan members of Congress, was already long overdue prior to the pandemic, and now has additional importance as the gaming industry emerges from this crisis.”

It added that the forms “flood an underbudgeted and understaffed IRS each year”.