NTRA Calls for Industry Support of Tax Reform
Image:
Description:
The National Thoroughbred Racing Association continues to move forward on work to reform tax rules on withholding and reporting with respect to pari-mutuel winnings and is calling for industry support of these efforts.
The NTRA has submitted its official response to an invitation by the Department of the Treasury and the Internal Revenue Service for comments on amending Treasury regulations regarding withholding and reporting with respect to pari-mutuel winnings.
Submission of the NTRA's formal response kicked off a six-week campaign during which the NTRA is encouraging fans, horseplayers, and industry stakeholders to support the push for modernized tax withholding and reporting from pari-mutuel wagering that accurately and fairly reflect the realities of wagering today.
Specifically, the NTRA is asking the Treasury and the IRS to amend their tax regulations to make it clear that the definition of the "amount of the wager" includes the total amount wagered by a bettor into a pari-mutuel pool when determining whether a bettor's winnings are subject to withholding and reporting. As explained in detail in the NTRA's response, such a clarification will result in more accurate withholding and reporting while also benefiting bettors and the horse racing and breeding industry as a whole.
The entire formal response to Treasury and the IRS by NTRA president and CEO Alex Waldrop can be accessed online.
A form that makes it easy for the public to submit an e-mail directly to the appropriate IRS and U.S. Treasury officials seeking comment can also be found on the NTRA website.
Public comments will be accepted through June 2.
The NTRA's nine-page response describes the current withholding and reporting requirements, as well as the increasingly prevalent issues associated with those requirements. In the final section of the letter Waldrop summarizes the industry position on Treasury Regulation section 31.3402(q)-1 regarding pari-mutuel wagering:
The current regulations relating to pari-mutuel reporting and withholding need to be updated for the following reasons:
* In the absence of a specific regulation concerning the definition of the "amount of the wager," the horse industry is forced to rely on the Instructions for Forms W-2G and 5754. The guidance provided by these Instructions does not reflect today's wagering strategies in which the vast majority of wagers are multi-horse and multi-race exotic bet types but instead reflects a bygone era when almost all wagers were straight win, place or show bets that had virtually no chance of exceeding the 300:1 ratio of wagering proceeds to "the amount of the wager;"
* The Instructions assume that a bettor has won more than he or she has actually won based on a calculation of the amount wagered that ignores the actual investment in a single pari-mutuel pool;
* Due to this outdated and unfair method of calculating the "amount of the wager," excessive withholding and reporting are taking bettors' winnings out of circulation--money that otherwise would be repeatedly re-bet;
* Undue withholding and reporting of winnings and the resulting lack of re-betting, depresses pari-mutuel wagering and the benefits that wagering supplies to all stakeholders including federal and state governments, which derive significant tax revenue from pari-mutuel wagering, as well as the nationwide agri-business that pari-mutuel wagering supports;
* An update to the regulations to reflect today's pari-mutuel wagering strategies will result in more accurate reporting and withholding by taxpayers and is consistent with IRC Section 3402(q) and basic tax policy; and
* Modernization will reduce burdensome and needless paperwork system-wide.