IRS Commissioner Says Increase to Slot Tax Threshold ‘Under Serious Consideration’

Posted on: May 14, 2024, 09:34h. 

Last updated on: May 14, 2024, 09:39h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

The top official at the Internal Revenue Service (IRS) has lent his support to raising how much a slots gambler can win before a casino must issue the player a W-2G filing form to report the winnings as taxable income.

IRS slot machine threshold
A slot machine pauses after a gambler won more than $1,200, which requires the casino to provide the player with an IRS tax form. IRS Commissioner Danny Werfel says the threshold could soon be increased. (Image: Reddit)

Under the current federal rule, a payer or casino must provide a slots player with a W-2G form when they win $1,200 or more on a slot machine. The jackpot threshold has remained at $1,200 since it was implemented in March 1977.

Appearing before a House Appropriations subcommittee in Washington, DC last week, IRS Commissioner Danny Werfel seemed supportive of increasing the slot threshold. Werfel revealed he’s embraced a November recommendation from the IRS Advisory Council suggesting the amount be elevated to $5,800.

I think it’s very valuable when we get input from the taxpaying community and our Advisory Council on when thresholds may be out of date,” Werfel said in response to a question about the topic posed by House Appropriations Financial Services and General Government Subcommittee Chair Rep. David Joyce (R-Ohio). “The determination of something like that is of regulatory nature and therefore the decision rests with the Treasury’s Office.”

Werfel added that he knows the IRS Advisory Council’s recommendation “is under serious consideration” at the Treasury.

Long Overdue 

US Reps. Dina Titus (D-Nevada) and Guy Reschenthaler (R-Pennsylvania) have been at the forefront in Washington urging regulatory action at the Treasury to increase the slot tax threshold. They’ve introduced legislation to take the matter into their own hands if change doesn’t come.

In 2022, Titus and Reschenthaler introduced the “Shifting Limits on Thresholds Act,” cleverly abbreviated the “SLOT Act.” The two leaders of the Congressional Gaming Caucus, where Joyce also sits, say the $1,200 threshold creates unnecessary overhead and paperwork for casinos, disrupts the player’s gaming experience, and takes a slot machine offline.

The purchasing power of $1,200 in 1977 is today equivalent to about $6,200. The SLOT Act has been reintroduced to Congress and proposes increasing the threshold to $5,000.

“Because the threshold has not kept up with inflation, it has resulted in a drastic increase in reportable jackpots, which trigger tax burdens for winners and compliance burdens for casinos,” explained Reschenthaler. “Increasing the threshold will eliminate this onerous red tape, ensuring the gaming industry can continue to support good-paying jobs, and foster economic growth in Pennsylvania and across the country.”

Slot Attendants Concerned

While casinos and the gambling public might be supportive of increasing the tax threshold for slot wins, there is a possible downside in that slot attendants could see reduced jobs and pay.

Slot attendants are casino workers who respond to a slot jackpot upwards of $1,200 to provide the winner with their W-2G form and pay out their winnings. It’s customary that the winner tip the slot attendant.  

As a slot attendant, this would destroy our income,” a slot attendant named Sam told Casino.org.

Sam estimated that less than 5% of slot jackpots he responds to are over $5,000.

“This would be life-changing in a bad way for many workers like myself who have been in the industry for years,” he added.