The WSOP has confirmed that it will not allow tax on winnings to be declared to the IRS via 5754 forms, creating a potential fiscal headache for players and their backers.
5754 forms are provided in instances in which there are more than one winner of a competition, such as a lottery, for example, where numerous members of a syndicate can benefit from a single lottery win.
Many poker players would like to see the same rules applied to poker, and in particular the WSOP, with its high payouts to players who often have complex backing agreements.
Currently, when a payer cashes in a WSOP tournament for winnings above $5,000, the casino will complete a W2-G form, through which it reports the winnings to the IRS.
The addition of a 5754 form would transfer tax liability to backers, as well as just the player, saving the poker community a lot of time and energy.
Many casinos in the US use 5754 forms, but the WSOP refuses to budge.
“While we understand that WSOP participants may enter into a variety of arrangements … [with backers], it is our view that the “winner” is unambiguously the individual that participated in the tournament,” the WSOP told PokerFives.com this week.
“Poker is both a game of skill and chance. In the situation posed by the form instructions, i.e., a group of people sharing a winning ticket, the ultimate winnings were not dependent on the skill and talent of the person receiving the winnings.”
“By contrast, an individual that provides the front money for a poker player is less the winner of a poker tournament (requiring a W2-G) than the beneficiary of a speculative financing arrangement or partnership agreement, which necessitates different filing requirements with the IRS.”
But not everyone is buying this argument, especially notÂ Ray Kondler, of Vegas accountancy firm Kondler and Associates. “I have been asked a number of times about this form over the past five or ten years and I do not have a good answer as to why the WSOP does not accept it,” he told PocketFives in an interview earlier this month.
“The form allows you to parcel out portions of your gambling winnings to other parties at the time of the payout. This prevents you from having to file Form 1099 for each backer you had for that tournament and settles all tax liability issues before any money is paid out.”
Some observers believe that the WSOP is flouting the law by not permitting the use of 5754 forms and that financial agreements between players are at the Series should be given the same legal credence as those of lottery syndicates.
After all, both the WSOP and the IRS benefit financially from poker players during the Series.
The WSOP maintains, however, that its terms and conditions specifically prohibit more than one individual being described as the “winner” of a single tournament cash.