Unreported Gambling Winnings Cost IRS Billions in Lost Taxes
A new study has found that numerous gamblers failing to report their winnings caused the IRS to miss out on close to $1.5 billion in taxes between 2018 and 2020.
Sign on IRS building. IRS misses out on $1.5b in taxes from unreported gambling winnings.
LISTEN TO THIS ARTICLE:According to a report by the Treasury Inspector General for Tax Administration (TIGTA), thousands of people failed to declare gambling earnings, resulting in a massive tax shortfall. The analysis examined over 48 million tax forms sent to US taxpayers from 2018 to 2020, amounting to approximately $156 billion in winnings.
Of these, around 150,000 individuals won more than $15,000 each but failed to file tax returns for their gambling income. The total unreported winnings were estimated at $13.2 billion, leaving the IRS short of about $1.4 billion in taxes.
IRS Struggles to Track Gambling Wins
One key reason behind this gap is the IRS’s difficulty in tracking gambling winnings. The report noted that many of the tax forms labelled "Certain Gambling Winnings" lacked crucial taxpayer-identification numbers, making it difficult for the IRS to verify if taxes had been paid. Furthermore, about two-thirds of those identified as owing taxes never received official notices, meaning their gambling earnings went unreported and untaxed.
This issue is becoming more pressing in light of the 2018 Supreme Court decision that legalized sports betting nationwide. The ruling led to massive growth in the sports betting industry, which generated billions of dollars for operators. However, it has also fueled a sharp increase in untaxed gambling winnings. Reports show that in 2023 alone, betting operators made over $11 billion, yet the IRS still faces difficulties in collecting taxes from individual gamblers.
More Finance News
TIGTA Proposals to Help the IRS
In response to the report, TIGTA proposed several measures to help the IRS reduce the amount of people who fail to report gambling winnings. The recommendations include stricter enforcement for those who fail to file and improving tracking systems to better identify individuals who do not report their gambling income. The IRS has agreed with four out of five of these proposals, suggesting that increased scrutiny of unreported winnings is likely in the future.
Additionally, the report recommended expanding IRS guidelines to provide more specific instructions regarding sports betting, as at present, the agency does not have a comprehensive system to monitor online sportsbooks. If implemented, the proposed changes could help the IRS recover a significant portion of the uncollected tax revenue while ensuring that individuals who benefit from legal gambling pay their fair share.
RELATED TOPICS: Finance
Latest News
Responsible Gambling
New Jersey Makes Significant Change to Gambling Self-Exclusion Program
Dec 24, 2024
Most Read
Parlays, Pressure, and Addiction - The Risks of Modern Sports Betting
Dec 20, 2024Must Read
Interviews
When Helping Others Is a Life-Long Mission - An Interview with Gordon Moody CEO, Monica Shafaq
Dec 17, 2024
Interviews
Review this New Post
Leave a Comment
User Comments
Comments for Unreported Gambling Winnings Cost IRS Billions in Lost Taxes