Compliance

Tax Form Knowledge

There is nothing we can do about tax-related reporting requirements but you can diffuse the situation with an unhappy guest in your casino.

As if we haven’t been through enough, tax season is upon us again. Even accountants wince a little at the thought of tax season. No doubt player’s club staff, hosts and slot attendants have a similar dread.

Every year there are guests that are unhappy about the tax related information they received or didn’t receive from the casino. Dealing with these guests is often a no-win situation. Even when you’re right, you’re wrong. You have to use all your guest service skills to handle these situations.

To help in your efforts, some knowledge of the tax forms and issue can help explain things and help diffuse the situation.

Form 1099 - Miscellaneous Income

One of the biggest complaints from guests is they don’t understand why they received a 1099 and are certain they didn’t win that much.

1099 forms must be mailed no later than January 31st each year. Income reported on form 1099 is a cumulative total for the calendar year. $600 is the cut-off point where reporting is required. The amount reported has nothing to do with jackpot wins, but prizes won in contests and drawings. Casinos usually set a threshold of $50 to $100 where they log these transactions so they can determine at the end of the year who they are required to send a 1099.

Handling these issues confidently and swiftly is key in getting the guest to a happier place. To that end, it’s important that access to the detail of dates, amounts and promotions that put them at $600 or more be readily available to staff in key guest contacts. A preventative step is to have a statement on your prize forms stating that “cumulative prize winnings of $600 or more in a calendar year will be reported to you and the IRS on form 1099.”  If the guests see this throughout the year then it shouldn’t be a shock to them when they receive the form in the mail.

Win/Loss Statement

Win/Loss statements also cause guest concerns at this time of year. Most casinos don’t automatically provide win/loss statements, and a few may not at all (my personal favorite). I have several issues with win/loss statements, similar to those guests who have issues with them.

First, they are not consistent from casino to casino. Seeing information about their play in different formats can lead to confusion.

Second, some win/loss statements may show cash-in and out. Others may show coin-in. If coin-in is shown, that amount is usually 5 to 10 times more than the actual cash the guest put into the machines. That can be shocking to them.

Third, the amounts on the win/loss statements can only report what happened while the guest had their player’s club card in the machine. If carded play runs between 40% and 60%, then on average the statements are half right.

Last, a win/loss statement is not acceptable documentation of gambling losses in the eyes of the IRS. I would avoid supplying win/loss statements to guests, but if you do, make sure your key guest contact staff understand the statements, what the numbers represent and have knowledge of the items mentioned above.

Form W-2G - Certain Gambling Winnings

The last thing I want to address is form W-2G. Since guests receive these at the time of a jackpot win, there is usually less confusion surrounding them. Issues guests have with these are usually one of two things.

Most common is they can’t find their W-2G. They simply want someone to re-print it quickly.

Second, they received a letter from the IRS stating that the wins they reported on their tax return for last year don’t match what the casino reported to them. These letters usually arrive in August of each year. Casinos are required to submit detail files to the IRS each year listing every single W-2G they issued and the information in every field, including taxes withheld. The information in these files is what the IRS is matching against. The files are the only way the IRS knows if a specific guest had taxes withheld.

Both of these issues are usually handled by having ready access to the guest’s jackpot history. Because reporting to the IRS is usually handled by Finance, guest contact staff should be informed of who specifically to contact if they can’t quickly resolve the issue.

None of us are thrilled to see tax season coming again, but we can make it a little easier on everyone if we’re prepared.  We can’t do anything about the tax-related reporting requirements, but we can do something about how quickly the issue is handled.  After all, the level of service provided is what truly sets one casino apart from another.

Educate your team and impress your guests.  

Kevin Huddleston
CPA, CGMA, CFF
Partner, Finley & Cook
Kevinh@finley-cook.com

Kevin Huddleston (Member, Choctaw Nation of Oklahoma) is the Partner for Finley & Cook’s Business Consulting Division, providing outsourced accounting and consulting services for Native American Tribes and casino clients. He has over thirty-five years of experience with auditing and accounting for various organizations, including Tribes and tribal enterprises, and he’s also a CGMA (Chartered Global Management Accountant) and a CFF (Certified in Financial Forensics). Clients value Kevin’s unique skill at helping non-financial casino managers, tribal leaders and gaming commissioners get an understanding of their casino’s operations.

His insights on performance help casino management and tribal leaders make strategic decisions. Through his nearly two decades of working within the gaming industry, he is an expert in integrating the many financial systems unique to the gaming industry. Finley & Cook, PLLC, currently have clients in over 40 states and are currently working with 52 Tribes, Tribal Casinos, and Tribal enterprises.

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