W-2G Threshold Revisited (Again)
The push to increase the W-2G threshold for slot machines has seemingly become an annual occurrence. The legislation introduced last year by Congresswoman Nancy Titus proposed an increase to the slot machine W-2G threshold from $1,200 to $5,000. I covered the potential impacts of this increase on gamblers last year.
Why is this issue back in the news now? For the first time, the IRS is seemingly supporting the proposal to increase the threshold. Danny Werfel, the IRS Commissioner, and the IRS Advisory Council recommended that the W-2G threshold should be increased to $5,800.
“The determination of something like that is of regulatory nature and therefore the decision rests with the Treasury’s Office” Werfel recently said. It should help to have the backing of the IRS, but it is ultimately up to legislators to pass a bill.
It should be noted that the proposed $5,000 threshold would only apply to slot machines in brick and mortar casinos. There is no language in the proposal that impacts the issuance of W-2Gs for online slot machines. It also does not apply to table games, keno, bingo, poker tournaments, horse racing or sports betting. While narrow in scope, it is addressing the largest concern for most gamblers.
The increased reporting threshold has support from casinos, the IRS and gamblers. It is now up to the legislators to enact new reporting requirements. It’s tough to determine if this is the proposal that will finally gain traction. It is clear the $1,200 threshold needs to be adjusted. It is unclear if Congress will agree and if so, if they believe the threshold should be $5,000 as proposed. If an adjustment is made to brick and mortar slot reporting, it will be interesting to see if additional proposals (such as increasing online slot machine reporting thresholds) will be close behind.
If passed, I would not expect to see an implementation of the increased threshold until 2025 or 2026. As with previous reporting threshold discussions, I will keep you updated as more news is released.