Internet Wagering Issue: Convenience vs. Privacy

[mhrussell]

I wanted to start this thread because I have concerns that jumping into the online wagering pool may not be such a slam dunk decision as one might think and I wanted to ask for opinions from this fine group.
I think we all are aware of the tremendous benefits of convenience, cost savings (admission, parking, etc.) and potential future custom automation via tools like CherryPkr of internet betting. What worries me is the loss of privacy. I think we should all realize that once you set up an internet account, all of your online betting records should be considered "public" and available to any government or private agency that would desire this information. The IRS issues alone are worth considering bypassing this whole thing let alone what other government/commercial hacks could/would do with proof that you are a regular horseplayer at a specific $ action level. I faced a similar issue when I played semi-pro Blackjack in the late 70's, early 80's on whether I should use casino credit and what types of comps to accept. Back then I decided not to surrender my personal information and remained a "cash" player and passed on the comps that were offered which required personal information (SSN, address, etc.). I am holding off on signing up with a BRISbet type service until I think this whole issue through clearly and completely.

Any thoughts/opinions are appreciated.

[Bob Harris]

Matt,

I say sign up for online service! If you're playing 5 days a week, you'll save approx. $400 a month in expenses by not going to the track (maybe a tad lower if you lived right next to a facility and didn't have to travel far).

Depending on one's tax bracket, that savings would greatly offset and in many cases eliminate any tax liability.

The main reason I think there is little reason to worry is simply because the IRS has limited resources and there are bigger fish to fry...they know that any big scores have a paperwork trail already and any profits from scores that don't require signing just wouldn't lead to enough revenue to warrant conducting an audit.

I'll be interested to see what other players think on the subject!

Bob

[so.cal.fan]

Excellent points made here, Matt.
This is the first I have read concerns like yours. Like I have posted many times here, handicappers are the smartest people around.
You just made up my mind.
I will continue to attend live races where my win bets are my own business!
I suggest we all PASS on this until we think it out.

[MikeH]

Matt -

I understand your concerns.

However, the IRS can't simply go into a business on a "witch hunt." They need "Probable Cause" and generally would need a search warrant to access this kind of information.

One situation that I have seen: a taxpayer with LARGE deductions for travel goes through an audit. He provides the IRS auditor copies of airline tickets that show he traveled to New York frequently from LA. But the auditor becomes suspicious when he doesn't see any calls to/from New York during these times. (I think that there were other factors here also, probably no hotel bills, etc...)

The auditor (who handles CIVIL stuff) refers the case to the IRS's Criminal Investigation Dept. ("CID", as they are referred to.)

What the CID guys need is a copy of the complete transaction history behind the ticket. They can't simply go to the airline/travel agency and ask for it; they get the Court to issue a subpoena after they show the judge what they have.

Turns out that this guy was taking several vacations a year to Club Med; he was exchanging his New York tickets for the Club Med stuff, writing it off on his return, and then providing the IRS with fraudulent info.

My point behind this is that the IRS can't walk into a business and ask for info; I've had first-hand experience with these subpoenas. They are very careful about them, and a businessman or accountant that provides info to them without a subpoena can be sued for release of private information...

I use both Philly Park and Winticket/BrisBet without concern.

[tanda]

Any big wins are reported under either scenario.

So, we are really only worried about the medium and small wins. When you consider the convenience and savings of interenet wagering, I think it is well worth it.

Also, the on-line service recordkeeping works in your favor in one important way. It documents your losing wagers for deduction purposes.

I played 10 tracks the other day for $3.20 in total cost (BRIS PPs with 20$ discount). 32 cents a card. On-line cuts my costs dramatically, plus allows me plays that I oculd not otherwise make because of lack of time.

I can see when the Gov would/could get involved(see my post under Dalhman comps).
Most likely they would not be after a specific individual,but they could request to see a companys or tracks electronic records under the guise of looking for laundered money or drug profits,or looking for embezzled funds.It would be a fishing expedition,but they won't tell you that,or the judge that would grant the supoena.
They would be looking for the money you won but not filed on,such as a $500 trifecta ticket you cashed ,but didn't report,since you didn't have to do so when you won it.A players card or comp card would make it easy to see how many times you did this.I am with you on this one mhrussel.

[so.cal.fan]

I think the IRS would absolutely check up on these records if they audit you.
I have a friend who signed for over 100K worth of pick six, superfectas one year, and they have audited him twice.
He always "balances" out his records, but..........he doesn't use phone or internet betting.
This is very troublesome, for a number of reasons.
Be careful you guys.

[Dick Schmidt]

Of course, one solution would be to abide by the law and pay your taxes. Look at it like any other risk/reward equation. One one hand, you save a few bucks, on the other you lose your self respect, most of your rights as a citizen, your career and you get a new roomie named Bubba.

Dick

[Dave Schwartz]

Dick,

Unless you swing with a LOT of money... then you get a roomate named "Muffy." They don't put THOSE guys in with the BAD guys.

Dave

[Rick Ransom]

Deja vu. This was the first subject I posted on. If you have a US account and you take the standard deduction you DO have a potential problem. You must report Gross Winnings as income and can only deduct losses if you itemize.

So, if you had an account last year and didn't report Gross Winnings, you're already guilty of non-compliance. If you itemized deductions, then you'd just owe taxes on any net win. If you took the standard deduction, then you'd owe taxes on the standard deduction plus the net win minus any other itemized deductions you could come up with.

So, if you have an account and anyone looks, you effectively have a "signer" for the total amount of all of your winning bets for the year. I know it sounds weird and totally unfair, but that's the way the tax code really is. I have no idea whether they would enforce it or not.

The point to me is not whether I should pay tax on substantial net gambling winnings for a year. I have no problem with that. I just don't like the idea of being treated differently than everyone else.

On the other hand, think about all of the people who play in casinos with player tracking. They're also all in non-compliance because they didn't report their wins either. The numbers would run at least into the tens of millions of people. So, if the IRS doesn't go after them, they probably won't go after you either. But if they had some other reason to want to go after you, ...!

[so.cal.fan]

I don't think anyone would actually go to jail, however, is it worth all the bother?
The real solution for all of us would be if the FEDS did not take taxes on gambling winnings! Damn it! We pay enough taxes!
Of course, this is like wishing for a 10% takeout.

[Bob Harris]

Rick is correct. Anyone who collects anything from gambling and doesn't note it on their return is technically guilty of non-compliance.

After checking a couple of tax sites, I was surprised to learn that my current record keeping system may not be as audit proof as I thought. A friend suggested a book titled "How to Keep More of What You Win (A Gambler's Guide to Taxes)" by Walter Lewis, CPA.

I checked Barnes and Noble's site and they have it available for 10.75 with free shipping if you buy more than one book (they don't have to be the same title). I picked up a copy for myself and a friend of mine...seemed like a small price for piece of mind.

[Rick Ransom]

Here's a story about a guy, we'll call him Mr. Wanna B. Pro. He signs up for a phone account and starts out betting $5 a race, makes about 1000 bets during the year and winds up with 20% profit. At the end of the year, his account wagering company sends him a statement saying his gross winnings are $6000 and losses are $5000. So he netted $1000 for the year, none of it on "signers". Now, this guy is in his 50's and doesn't want to take out a mortgage or live in a state with high taxes just so he can have a lot of itemized deductions, so he takes the standard deduction every year. Then he asks around and reads a lot about taxes and discovers that his only choices are:

1. Ignore the whole thing and hope nobody ever finds out.

2. Pay taxes on $6000 instead of $1000.

3. Declare himself a business and pay an additional 15.3% FICA tax on the net.

What do you think the guy decided to do? Well one thing he did was decide that account wagering was not a really great deal considering the trouble it could get you into.

Any similarity between the above story and any persons living or dead is purely coincidental.

[Bob Harris]

I received this response to an inquiry on the privacy of my account...Phonebet claims the IRS can't access your wagering history...I think I'm gonna just pay my taxes anyway! <g>


Mr. Harris.
ALL winning wagers over 300-1 odds are reported to the IRS regardless of
where these wagers are placed (Phonebet vs. teller window). All winning wagers
that gross over $5,000.00 are subject to an immediate withholding of 28% at
the time the ticket(s) is (are) cashed. The IRS cannot "look" into your
account, they only can see what information we send to them concerning any
winning wagers that fulfill the requirements I stated above. Any winning
wagers that are LESS that 300-1 odds are not reported to the IRS at all. . If
you need any further assistance, please don't hesitate to contact me.
Sincerely,
Lisa McKee
Phonebet Business Office

[cato]

While the IRS cannot randomly "look" into accounts; in that they cannot call up Ladbroke and say send me all of your records so we can start hassling gamblers, they can subpena your records (generally in connection with an audit) and, essentially force you to allow them to look into your account; or if the audit is going really badly, they could subpoena the records directly and have the betting service produce the records...

So you were right, pay the taxes and foget about it.

Cato

[tanda]

Rick,

I agree with your concerns but not your characterization of on-line/telephone bettors as being treated different by the law. The law regarding gambling winnings is the same for on-track bettors and on-line/telephone bettors. What is different for on-line/telephone bettors is that a paper trail of all wagers exists. However, that is not an inconsistency with the tax laws.

Since I itemize, I am not concerned. I also have a good life, wonderful wife and child and no reason to jeopardize that with tax avoidance/evasion.

Yes, non-itemizers are screwed on gambling winnings but they are screwed on several other unrelated fronts as well. How about rentors or childless people or the marriage penalty? Now that I have a child and home, my deductions are itemized and my taxes will be down substantially this year (plus W's tax cut). Why? I will make more this year than last. Why couldn't I deduct my lease last year?

Because the tax code is a mess of unfair, illogical laws. Gamblers are not alone in finding when they examine the code that it leads to some unfair, perverse consequences. So my problem is not with how it treats gamblers, it is with how it treats everybody.

[Rick Ransom]

I agree that you should pay taxes on your net win. But if they would try to tax my gross win, I'd object on the grounds that they're not doing that to millions of other gamblers. Signers sometimes fall into the territory of unfairness since they are automatically reported and any losses you might try to use to compensate are subject to all of the crazy rules I mentioned before.

Is the $5000 withholding rule for 300-1 odds only or for all bets? A 24-1 horse on a $200 win bet would hit that limit. If that's the case, I'd be a lot less likely to play extreme longshots.


tanda,

Everyone who plays slots in a casino and uses a player tracking card has exactly the same problem. In their case, $1200 is the level for reporting, but all of the records are there so that they could tax gross win if they wanted to. Now I don't think this would ever happen because casinos have major political clout. But horse racing phone betting operations are small potatoes.

[Tom]

Amen, Tanda.
This country needs to overhaul its tax code.
As it is, it is totally unfair and just invites fraud and cheating.
(Not me, of course)

Tom

[hurrikane]

this may be a moot point as most places now won't let you deposit money from a credit/debit card into an online account...thank the government for that. Why they feel they should tell me where I can spend my hard earned/hard taxed dollars is beyond me.

As for the taxes..not worth the headache of avoiding them. In fact you would be better just refusing to pay as that is not a crime..however intentionally defrauding or avoiding paying taxes is a crime.

PS...you can refuse to pay they will still come and take your stuff if they find out.

PSS....try betting 10 $20 tickets on your longshot..same result..no taxes....but we all know that don't we.

[mhrussell]

I second that "amen" to tanda's last post... my Libertarian brother in arms..

I have a close horseplaying friend, no relation, that prompted my initial question. I think she has now decided to forego the online wagering completely, pay taxes on her gross signers (will not deduct any losses as audit protection) and maintain privacy on the results of her win bets.

Unfortunately, I am still am chicken enough that I report all my net earnings andI keep adequate records in case of the dreaded IRS audit. Also, I am still concerned that other government/insurance agencies, or who the hell knows kind of agencies, can acquire, thru fair means or foul, and use the online wagering paper trial to cause trouble for me and my family sometime in the future. So I will continue as a "on-track" bettor only.

Thanks for all your intelligent, insightful comments. This board is the greatest! Wish we could just take over and run the country; we would do it right. But I think a lot of us are in the situation- as the lyrics of Billy Joel put it,
"I'd start a revolution but I don't have time!"

Regards,

[Dave Schwartz]

Correct me if I am wrong, but if you wager via a telephone account or internet, are the funds not taxed as distributed?

That is, is the gain accumulated at the time of payoff or when you make a withdrawal?


Regards,
Dave Schwartz

[GR1@HTR]

Ladbroke sends out tax forms immediately after an IRS ticket. They claim that all signers are reported to the IRS electronically and no signiture is needed.

[tanda]

Dave,

I assume you mean when is the income "realized" for IRS purposes. If so, it is when the wager proceeds are paid to your account. In other words, on the individual wagers payoff. It is not tax on net proceeds when distributed.

By the way, to take a contrarian view for a minute. We have it better than some. At least we have the rather safe opportunity to hide income under $5,000 per wager or 300:1 payoffs.

If my wife works for somebody and earns $4,999, that income is reported. Unless she is paid "under the table", all of her income is reported. But we only have an information return filed for certain winnings and withholding for even fewer winnings. Other people have all income reported and taxes withheld fro all earnings.

Maybe some have grown accustomed to the ease which handicappers can avoid taxes on winnings. At least all of our winnings are not reported. If gambling investment returns were treated similar to other investment returns, all winnings would be reported.

[Tom]

A withdrawl????????
Wassat????

[Rick Ransom]

mhrussell,

Unfortunately, your friend is not safe reporting only her signers and foregoing trying to claim losses. If audited, she would have to claim that she only bet on the races where she had the signers and no others, a highly unlikely event. The IRS could estimate her actual winnings based on the typical player or her bank records and assess taxes on a higher amount. I have read some about efforts to come up with some kind of formula to do just that.

So a signer is just a red flag that says you undoubtedly engaged in a lot of gambling and won a lot of bets along the way. Whether you lost a lot or not is irrelevant. It's almost certain that you didn't report all of your wins if your reported gambling income is exactly equal to the amount of your signers.

You may think I'm just paranoid, but there was a woman who was audited after reporting some wins from slot machines that way. When she produced casino player tracking records attempting to show that she actually had lost money overall, she was forced to use the actual figures for gross wins and losses which were in the $300,000 range each! This caused some other nasty things to come into effect involving alternative minimum tax and disqualifying her from taking some other important deductions including an IRA. Out of the frying pan and into the fire!

And don't think Congress is going to help you any either. Gambling is considered a vice and therefore unfair taxation is desirable in order to discourage the activity. Look at what happened to the smokers. The victims (smokers) now pay higher prices for cigarettes and higher taxes and the perpetrators (tobacco companies) are still in business making just as much profit. If they can find a way to increase taxes on the gamblers without bankrupting the gambling businesses, they'll do it.

That's enough ranting for now. Time to get back to engaging in all of my favorite vices before they become illegal or too expensive.

[Tom]

Tax frauds and bank robbers will always be heros.
Give me Billy the Kid over Geo. Bush anyday.
If anyone is ever going to be a good president, it will be a horseplayer. Unlike our current Leaders(?) horseplayers have opinions and back them up. There are more congressional members with criminal records than there are at the track.
Tom

[skyblue1]

Tom,

Well maybe you'll like dubya a little better when I tell you that he is more like Billy the Kid.

Here in Texas down in Henderson County, just outside Athens (home of the hamburger), dubya had a weekend home on a small private lake with about a dozen or so other homeowners. There was a lot of land around them to keep out the riff raff. Instead of paying tax on the land the way others do, dubya and his fellow homeowners went to the Henderson County Tax Appraisers office and had the land reclassified as Agricultural rather than Residential. This cut dubya's annual tax bill by a little over $2500 which had to be made up off of other people's property taxes.

And after that I won't even get into how he stole $14,000,000 from the taxpayers of Arlington, Texas - but he did.

Billy the Kid rides again.

[smf]

Skyblue,

I'm envious of your hometown. One of the nicest small towns I've ever been to. A lot of retirees out there and I guess it's easy to see why.

As far as Arlington goes, the local businesses have caught up to speed on that 14 mill, and then some. The locals kinda like W, to be honest. If W had taken the Rangers to another town it w/h been a shock to their economy.

[Rick Ransom]

Read the articles at www.rbstaxes.com.

Yikes!

[Bob Harris]

Originally posted by Rick Ransom
Read the articles at www.rbstaxes.com.

Yikes!

Thanks for that link, Rick. I may get their book too... depending on how complete the one I just ordered seems.

I've never been a big fan of Enrolled Agents when it comes to taxes but I'm married to a CPA so I'm sure my objectivity has been tainted! <g>

You're right about those articles....pretty damn scary!

[Rick Ransom]

Bob,

Of course, it's in their best interest to scare us into using their services. But, I'm convinced that someone with a high profile could easily become an IRS "example", especially if they have enemies. The worst part about all of this is that there appear to be some cases where you're damned if you do and damned if you don't. Is it true that a pro who had say $330,000 in gross winnings and $300,000 in losses would get hit with the altenative minimum tax?

[mhrussell]

Rick-

I think the answer to your case of Mr. Pro Player with $330,000 gross win vs. $300,000 in losses is "yes"; this poor pro could easily get hit with the AMT. I was having difficulty following the points made about "gross" vs. net wins, so last night I pulled up last years' TurboTax and played some games. Sure enough, the gross gambling wins get into the "tax game" long before the "losses" show up as itemized deductions (not subject to the 2% limitiation) on Schedule A. Not only can a large win trigger the AMT but can also result in restrictions on the total amount of your itemized deductions, IRA contributions and other deductions whose eligibility is a function of your gross income. This is indeed outrageous! A normal business would file using Schedule C and only the "net" would be taxed. In this case, you are penalized just because your gross income is higher with no consideration given to your actual tax liability.

But hey, there is no argument at the point of a gun, right? And our government leaders and office holders have the gaul to wonder why the public holds government in such disdain when the fundamental principle at the heart of the nation's income tax code is theft.

[tanda]

Gun at our head?

C'mon.

You greedy bastards are just trying to avoid paying your fair share. Living in this country is a privilege and paying taxes to support this country is a privilege as well. You ought to feel happy to pay those taxes. After all, you get so many rewards from them. The the fruit-fly research subsidies, the government credit cards which are spent be bureaucrats on pornography, the unneeded military bases, etc.

There is no gun. Our government is for the people, by the people. You are so lucky to be taxed at an effective rate of 30%. After all, that is a small price to pay to live in this country.

Besides, why do you need the extra money? The government will do a much better job of spending it than you. You cannot be trusted. Only elitists in government know what is best for us ordinary folks. I am damn glad to have them and you should be as well.

You are all ungrateful.

[Rick Ransom]

By the way, you guys in California who have a Golden State Rewards Network Card are already in trouble. They've got your numbers and they're probably a lot bigger than you think.

[so.cal.fan]

You are sooooooo right about that, Rick Ransom.
You get very little "rewards" and they get a lot of info on you.
This is such a good thread, it really opened my eyes!
Thanks for all the posts everyone.

[Tim]

I have been following this thread with great interest. Good stuff!

Rick,

RBTaxes is an interesting site.

Matt,

Some impressions:

My understanding is that casual gambling winnings can only be offset by gambling losses incurred in the same year. Expenses don't qualify as deductions.

If you have a operation with $300,000 wagered and $330,000 cashed (thats a cashflow of $25,000 a month)it would pay you to meet the IRS criteria of a "professional gambler" and file a Schedule C. That the only way your DRF's, computers, milage and other business expenses can be deducted. As a professional you can pay the tax accountant with pretax dollars and maybe qualify for one of the pretax saving plans.

Of course this is all guesswork and speculation on my part. This stuff is over my head.

[karlskorner]

Somehow, the person who lived next door or down the street from you or I , when he/she went into government, be it local or national, they changed. We speak of them as another species. They are no longer us, they turn into them. These are the same people we went to school with, socialized with, partied with.

But now they are in government, what happened ? As I use to tell the people who worked for me, it's GREED, greed coming up over the slime. We all have a touch of this virus, some more than others.

Karl

[tanda]

Sorry guys.

Ted Kennedy got access to my login ID and made that last post under my name.

[Rick Ransom]

Tim,

You're right, you can make it a business. Then you have the privilege of paying another 15.3% self employment tax on the net. Do you really have that many deductions that would be accepted by the IRS in an audit?

[Tom]

Originally posted by tanda
Sorry guys.

Ted Kennedy got access to my login ID and made that last post under my name.



I thought I smelled gin on that post!
BTW, it gov'nt of the people, by the people, and in spite of the people.

And as a single white male with no dedections, I can assure you that I pay my fair share of taxes, my unfair share of taxes, and several of liberals share of taxes
(sorry, andy....I couldn't resist).
But I am not complaining. I can afford to pay so I pay.
What I resent is that my triple share is not enough, now they have go after what little I save of my bankroll.
These santimonious thieves who are in office only to supply pork. I draw the line there. Just betting money is adding to taxes, so if I forget to claim an exacta or two, I will sleep good at night.
But of course, I don't forget ~G~
Tom

[Rick Ransom]

Tom,

My official position from now on is that I make mind bets only, no money is involved. So, I'm safe until they decide to tax IQ capital gains or something like that.

[Tim]

Rick,

Yep, been there, done that

Actually the effective self employment tax rate is a little lower because 50% of the tax reported on Schedule SE comes back to the 1040 as a part of the adjusted gross income calculation.

Here are some facts of life about IRS audits.

If you don't report enough income to justify your life style you are fu***d.
If you get caught in an outright lie you are fu***d.
If you go into one without a tax attorney you are fu***d.
In other words, if you are audited you are fu***d

The lesson to be learned about tax compliance is that you either:

1) pay an accountant to maximize your after tax income, minimize your audit exposure and pay your taxes
2) gamble that you never get audited
3) pay an attorney, taxes and fines as the result of an audit

[Rick Ransom]

Tim,

My ex-wife went to work for the IRS after she got her MBA in order to get good experience that other people would want. The only problem is that her going to work triggered an automatic audit involving my previous wife who had claimed deductions that weren't allowed for her. Well, the IRS decided since I was making a really big income and was easier to catch that they'd just arbitrarily assess taxes against me. So I had to fight the audit, which I won. But, I spent a considerable amount of time proving I was innocent.

So, any of you who might be wondering about this, you don't want to go there! They have all of the cards and can make your life miserable even if you were acting in good faith. Trust me, you don't want to get on their sh** list!

By the way, everyone I knew who was working for the IRS was getting about 1/2 of the income that the average person with their education and experience would get so what do we have here? OK, we have some who are just out of school and are using this as a way to get a better job. They're gone in about a year. We also have those who have really great education or experience but can't get a job elsewhere because they've really fu**ed up somewhere. As an example, one of they guys was an ex-lawyer. As a GS-5 working for the IRS he was making about $18000 a year. You figure it out!

[Tim]

Thats what I said

In other words, if you are audited you are fu***d

[Tom]

And this is supposed to be a great country. I think everyone should put down their flags, cut out the propaganda, and make it one. Not by comparison to a bunch of third world s**t holes, but to an ideal, a standard. There is a hell of lot of crap getting covered over at home here. If we get too complacent, then we turn into a third world s**t hole, too.
When we hae people getting railroaded by the modern Nazi party (IRS), people getting killed on our streets, old people getting screwed over their medicine, social security getting stolen from us, and a government full of liars, rapists, child molesters, and thieves, then we ain't so damn great. We got a lot dirty laundry sittiing around the house. What we have right now needs a lot of work.
Then we can sit back and pat ourselves on the back.
Tom

[Rick Ransom]

Tom,

You sound like an extremist but I've been through a lot. Like living in Korea and working 12 hours a day 7 days a week. And when I decided I didn't want to put up with that sh** anymore, they sued me!. I won, but again, it cost me money (about $1100) and time! Life ain't fair so get used to it!

[Tom]

Originally posted by Rick Ransom
Tom,

You sound like an extremist but I've been through a lot. Like living in Korea and working 12 hours a day 7 days a week. And when I decided I didn't want to put up with that sh** anymore, they sued me!. I won, but again, it cost me money (about $1100) and time! Life ain't fair so get used to it!

I don't think I'm so extreme- I just don't put up with s**t. If it ain't fair, then I'm gonna fight it. I don't think we can compare our lives to Korea-we need to compare our lives to what we think is fair and what we want.
Anyone can pick out a country and say we are better off than they are. What's the point in that? What is a better goal, to have more people not dying of infection than Korea or to have everyone able to get any prescription drug they need?
Koreans "got used to it" and look at them-no there is great country!
If we get used to it, then it is ours.
When we say we are a great nation, I say prove it. Don't show me your best, show me your worst. The bottom level is where greatness is measured, not the top. When we get the bottom to where the top is now, then we start over again. It never ends. Until you end up Korea, or Mexico, or (enter name here)________.
Nice chatting with you, but I think we are getting off topic a bit.
See what that damn IRS will do to you?
~G~
Later.
Tom

[smf]

Both my parents and a brother have all gone thru IRS audits as small business owners. A lot depends on the auditor. Some are real pricks and others are very fair, I'm told.

Long story short, I ride (cycling) with a group on tues/ thurs nites. There are 3 separate groups of 7-9 per that meet up at a local HS and ride a few miles in the country then eat dinner or just shoot the breeze.

One of the (less popular) riders in the group is an IRS employee who used to be an auditor/ agent. He was busted down for "inappropriate behavior" 2 yrs ago and is now a pencil pusher according to his wife.

Long story short (again), my friends in the group have been hushed around the IRS guy about my "new gig" (at my asking) until Tuesday nite when a buddy said "you still making money betting on horses?". He didn't think the IRS guy was around.

So--- I fully expect an audit next yr b/c this guy is a real jerk. No friend of mine, that's for certain.

[smf]

Concerning taxes, I believe it's unfair for the IRS to tax your winnings if you have another source of income. I agree with tanda and others on that point. It really does get excessive. If you own your house outright and have other income sources (job), each and every dollar you gross is taxable. That's the way the law reads.

That's unfair.

Player tracking systems worry me as well. I have a problem with any org that collects data and can in turn sell that info to whomever, which is common now. It's a privacy matter more than a tax accountabilty issue w/ me.

Finally, I consulted a tax atty 15 months ago with my 'scenario'. I came away w/ the advice to simply keep accurate records and don't show a 10-20k net while your lifestyle indicates otherwise. That's the biggest red flag of all I was told... Asset accrual and excessive spending while filing an unrealistically low return is the golden invitation for an audit.

[takeout]

I seem to recall a Beyer column of long ago where some guy hits a tri for about 12k and because of his situation he actually ended up owing THEM money!

[Rick Ransom]

Tom,

I meant to say "I may sound like an extremist" instead of "you sound like an extremist". Sorry I mistyped that.

It wasn't Koreans that sued me, it was a US defense contractor who thought that when they got me to Korea they could do anything they wanted because of moving expenses and taxes. My options were very limited because I was working in a foreign country and it's not clear what if any labor laws apply there.

When you hear about sweatshops overseas run by US corporations, you can get some idea of what it would be like working here if there were no labor laws. I used to be anti-union but I'm not so sure anymore. They may be a necessary evil.

[Rick Ransom]

smf,

It's always been my opinion that if you party away all of your winnings on things where you have nothing left to show for it you'll never have a problem. If you're accumulating a lot of assets you'd better dot every i and cross every t. If you're reporting a reasonable amount for living expenses and not visibly accumulating wealth or property there is nothing to base an assessment on. But, if someone is keeping an accounting of every bet you make, ...