Committee urges IRS to modernize parimutuel tax treatment

by | Jun 9, 2016 | Breaking, Business, Regionwide

From a National Thoroughbred Racing Association release

The U.S. House of Representatives Committee on Appropriations today passed the Financial Services and General Government Appropriations Bill for fiscal year 2017. This bill makes appropriations for the United States Treasury, Internal Revenue Service (IRS) and certain other agencies and includes language that encourages the IRS to modernize regulations for withholding and reporting pari-mutuel winnings.

Last year the IRS and the Treasury begun an examination of current pari-mutuel tax withholding rules at the request of the NTRA and numerous Members of Congress. Also last year the IRS and Treasury began a rulemaking process to examine the tax treatment of certain wagering winnings including pari-mutuel.

NTRA President and Chief Executive Officer Alex Waldrop addressed the issue at a hearing before Treasury and IRS officials on June 17, 2015, when he outlined how wagering habits have changed in the 21st century and how current regulations are punitive. Updates proposed by the NTRA would clarify regulations by redefining the “amount of the wager” to include all of a bettor’s investment into a single pari-mutuel pool, and not simply the base amount of the winning combination.

Language in the related Appropriations Committee report reads:

Guidelines for Pari-mutuel Winnings – The Committee appreciates the Department of the Treasury’s proposed rule (REG-132253-11) published on March 4, 2015, along with the associated public hearing held on June 17, 2015. The Committee encourages the Treasury to expedite final consideration of the guidance which would modernize the rules governing pari-mutuel wagering.

“We are immensely grateful to the Committee and its chairman, Rep. Hal Rogers (R-KY), for including this language in the bill,” Waldrop said. “Achieving fair and modern taxation of pari-mutuel winnings remains one of the NTRA’s highest priorities and this is another step in the right direction.”

While the language does not compel the Treasury to act on the rule, it provides additional support to modernize current tax regulations. The bill has not been scheduled for a vote before the full House of Representatives to date.