New IRS Regulations for Poker Tournaments

Usually when the words "new regulations" come out the offices of the Internal Revenue Service most of the population should prepare for something that will feel remarkably like a prostate exam. Those who enjoy the sport of tournament poker had better get ready for the IRS to make them very uncomfortable in the coming year. Starting on March 4, 2008 the IRS is implementing a new requirement for reporting poker tournament winnings."In the past, sponsors and players have been confused over whether sponsors who hold the money for players are required to report the winnings and/or withhold taxes on the winnings," said Mark Walstrom, an Enrolled Agent and Licensed Taxpayer Representative from JK Harris & Company, the nation's largest tax resolution firm.The new regulations mandate that all tournament sponsors report tournament winnings of $5000 or more. The tournament sponsors will notify tournament winners using a standard IRS, W-2G form as well as notifying the IRS itself. Sponsors who do not comply with this regulation will be forced to pay any tax that should have been withheld from the winner had the withholding requirement been asserted. Non reporting sponsors will be paying to the tune of 25% of the dollar value of the amount they should have originally reported.