Quote:
|
Originally Posted by Holland Hacker
I'm NOT a lawyer but I am a CPA that works in the field of Tax. After reading the letter last night I decided to do a little research into the history and justification of the withholding requirements. (YAWN) I do not know why as I have never had a signer, I came close last week at Belmont but still have yet to make that big score. Hopefully Saturday, Go Digger! Anyway if your inclined to know the history for the multipe wagers vs. single wagers below is a brief history.
Nearly 20 years ago there was a Private Letter Ruling ("PLR") issued by the IRS in response to someone asking whether a three horse exacta box was one bet or six bets for purposes of computing the amount to be reported withheld. If you're so inclined to read look for it or read it is PLR7823066.
The PLR states "the derivation of the rule in the Instructions for Form W-2G and 5754 that multiple wagers shall be considered as seprate debts is the Conference Report as Filed by the Conference Committee on Septemner 13, 1976 on Public Law 94-455 (Tax Reform Act of 1976), which reads as follows:
"Under the conference agreement, it is intended that therm 'wagering pool' is to include all paimutueal betting pools, including on and off track racing pools, and similar types of betting pools."
The PLR goes on to say "The conference agreement also makes it clear that withholding applies to winnings net of the ticket price taking into account all tickets for identical wagers. For example if one $100 bet and two $50 bets are placed on a single horse to win a single race track event, any winnings from the three tickets should be added together and the ticket prices of all three tickets should be deducted to determine net winnings. However, if the bets are placed on different horses or on different events, the net winnings are to be determined separately for each ticket."
I knew that these rules were antiquated but I didn't realize that they were drafted long before the advent of most of the exotic wagers of today. It is absurd that these rules would still be applicable to pick 3s, pick 4s, pick 6s as well as fectas both Tri and Super that are a significant amount of the wagering base in the US today.
In summary the current tax treatment is based on a conference committee report from the enactment of the 1976 Tax Reform Act and not any enacted tax legislation. That doesn't mean that it is "bad" law for NYRA or any other tracks or wagering service to be following.
|
Pick up a copy of Steven Crist's Exotic Betting. There is a whoile chapter devoted to the issue.
It also goes into detail on estimates as to how much handle tracks are losing each year because of the withholdings.