Busted by IRS now i owe back taxes on winnings

[docicu3]

Originally Posted by Seattleallstar

cause its back tax from 2007 filing

If you can document you have a net lost for the year in 2007 then you are starting with no tax owed from 2007.

There are no penalties for not reporting taxes you don't owe. You have to be careful that you can document your losses and that the pattern of your wagers is consistent to get credit for your loses to offset the capital gains of winnings. There are several suits here that can give you more detail if you need it.