Suppose you’re a resident of the United Kingdom and you come to Las Vegas to play in the World Series of Poker (WSOP) or just try your luck at a slot machine here. You have good luck and manage to win $10,000. Even better, given that the United States and the United Kingdom have a tax treaty you know you won’t owe any tax to the IRS. Imagine your surprise when the casino hands you $7,000 rather than $10,000. You’re informed that casinos are no longer allowed to issue Individual Taxpayer Identification Numbers (ITINs) by the IRS; unless you have a valid ITIN the casino must withhold 30% of your winnings.
On Friday, the IRS sent a major casino here in Las Vegas a letter informing them that because of a provision in the PATH Act no one but the IRS can issue ITINs. I assume all casinos that had been authorized by the IRS to issue ITINs have received this letter and are implementing this policy.
If you have a valid ITIN (and have renewed it, if applicable), this new policy won’t matter to you. For all other non-Americans who would normally not be subject to withholding you need to obtain an ITIN. Unfortunately, this is anything but easy.
You used to be able to use a Certified Acceptance Agent (CAA). CAAs were in numerous countries and would be able to obtain an ITIN for those who could show a Tax Treaty reason for doing so. The PATH Act ended CAAs so that’s gone.
There used to be a few IRS employees outside the United States. You could make an appointment to see one of these individuals, show him or her the required documents, and you would have an ITIN issued. Unfortunately, there no longer are IRS employees abroad.
You can, of course, send in Form W-7 and all required attachments (this includes your passport) to the IRS. Given you just might need that passport this doesn’t look like a good solution.
That leaves just one method that I know of: Going to an IRS office, proving a Tax Treaty reason, and submitting the required documents. An IRS employee will make a copy of your passport. While you will not get the ITIN immediately (the paperwork is still sent to the ITIN office in Austin, Texas) you will still have your passport. In eight to sixteen weeks you will receive your ITIN in the mail.
But what about those winnings? If you take that money now, the casino will give you a Form 1042-S and withhold the 30%. You can then file a US tax return the following year, attaching a copy of the 1042-S, and six or so months later you will receive your withholding back. (This assumes you reside in a country that has a Tax Treaty with the US that exempts gambling winnings from taxation.)
The poker room manager I spoke with noted that you could leave the money with the casino and come back when you have your ITIN. That may work if you don’t need that money and the casino will allow that. Otherwise, you will likely be without the withheld funds for some time.
The National Association of Enrolled Agents (NAEA) sent a letter to the IRS requesting that CAAs continue to be allowed to issue ITINs. The IRS responded by saying “blame Congress, not us.” I expect the American Gaming Association to complain to both the IRS and Congress about the inability of casinos to issue ITINs.
There’s one last issue: You can no longer just walk into an IRS office and get assistance; you must make an appointment. You have to call the IRS (at 844-545-5640; this phone number works for making an appointment at any IRS office) to make an appointment at the IRS office in downtown Las Vegas. The last time I checked if you called today the earliest you would have your appointment is two weeks from today. If you don’t have an ITIN, reside in a Tax Treaty country, and plan on playing in the World Series of Poker this summer, you may want to make an appointment with the IRS so that you can start the process of obtaining your ITIN prior to playing.
Hopefully, the IRS and/or Congress will reconsider this policy. Until then, the IRS is playing the role of the Grinch for many gambling winners.
UPDATE: The World Series of poker tweeted that they will still be able to issue ITINs:
We will be able to issue ITIN's to international players at our event @RioVegas This doesn't affect WSOP. https://t.co/54gwNXjx0i
— WSOP (@WSOP) February 14, 2017
While I hope that @WSOP is correct, based on what I’ve been told they’re wrong (unless Congress changes the law or the IRS changes their mind). The problem is that the IRS has interpreted the PATH Act that only they can issue ITINs. The individual I spoke with is certainly in the know, and the casino he works act has issued ITINs in the past and would like to continue issuing ITINs. The IRS can’t discriminate and allow Caesars Entertainment’s casinos to issue ITINs while MGM/Mirage, Venetian, and Wynn/Encore cannot.
My hope in publicizing this decision is that the policy will change, either by Congress acting or groups such as the American Gaming Association pressuring the IRS.
Tags: ITIN
Hi Mr. Fox,
I have two questions/comments regarding this entry.
First, I was under the impression that someone from a country with a tax treaty exemption would simply have to show his passport with a filled W-8BEN to avoid the 30% withholding. From what I read here, you seem to imply that an ITIN is also needed. Is it that an ITIN was automatically emitted to someone from such a country (UK for instance) directly at the casino if he had a correctly filed W-8BEN? If you’re right, am I mistaken in understanding that all winners outside of the US will now have to pay 30% on their winnings and will only be able to recover this money by filing a 1040NR once the year is over?
Also, you say that “The poker room manager I spoke with noted that you could leave the money with the casino and come back when you have your ITIN. That may work if you don’t need that money and the casino will allow that. Otherwise, you will likely be without the withheld funds for some time.”
From my experience, IRS employees will refuse to emit an ITIN unless you attach a 1040NR justifying why you need an ITIN in the first place. Therefore, I don’t see how someone could simply apply for an ITIN, get one, and get his full money at the casino without filing a 1040NR. I know for a fact that’s the case for Canadian winners. Is it different for gamblers of countries with tax treaties exempting them from the 30% withholding? I suppose this would mean these people would check case (h) instead of case (b) on form W-7?
Thanks for your great content.
Just to be crystal clear, I should have written:
“If you’re right, am I mistaken in understanding that all winners outside of the US will now have to pay 30% on their winnings and will only be able to recover this money by filing a 1040NR once the year is over, UNLESS THEY ALREADY HAVE AN ITIN?”
Basically, that’s somewhat true. Anyone who does not have an ITIN and is not a resident from a tax treaty country (vis-a-vis gambling) will have 30% withheld. They can, if they reside in a tax treaty country, file a Form 1040NR after year-end along with Form W-7 (Application for an ITIN) and obtain the withheld funds.
It is unclear whether or not you can apply for an ITIN for gambling (if you’re from a tax treaty country) before you actually win money and need the ITIN. In theory, you can (one of the reasons for granting an ITIN is a tax treaty position); in practice, we won’t know until people try whether or not the IRS will issue ITINs. In any case, the ITIN office is slow (typical processing time is four months), so we’re almost at the point where one can’t get an ITIN for the WSOP.
The withheld funds would be subject to a refund. Of course, say you cash at the WSOP on July 1, 2017. You can’t file the Form 1040NR until about February 2018 (that’s when the Form is released). You then have to wait for the ITIN to be processed (four months) and the Form 1040NR to be processed (two to six months), so the earliest you would receive the refund is August 2018. Those refunds are also mailed as checks in US funds, so someone in (say) the United Kingdom would have a possible wait for the funds to be cleared at his or her bank.
Hi Russ,
I would like to know if their is any kind of law that states a casino has to issue a win/loss statement to a client without the client physically going into the casino to get it.
I have received all my win/loss statements from all but one. This one refuses to give me one unless I drive hundreds of miles from where I live to get it.
I would really appreciate a reply to this on your site and to my email address.
There is no law. The state regulatory agency (that regulates that specific casino) might or might not require that statement be sent to you.