IRS AC Backs Up Raising Tax Threshold On Slot Jackpots

Leaders of the Congress, including Dina Titus (D-NV) who have been requesting from the Internal Revenue Service (IRS) to increase the tax reporting limit on jackpots from slot machines for almost a decade, have got some gladly received support from an uncommon source, which is the agency’s Advisory Council.

Rising the threshold:

In a ruling from November 2023, the aforementioned IRS Advisory Council commented that the threshold amount must be lifted from $1,200 to $5,800, which represents an additional $800 over the amount requested by members of the Congressional Gaming Caucus. Additionally, a spokeperson for Titus, who was the first to ask the IRS Commissioner to lift the threshold for reporting slots jackpot during 2015, commented that office was familiar with the news but decided to wait for the formal statement from the said Advisory Council.

The current threshold on slot jackpots of $1.200 was set during 1977, which is the time when gambling was offiicially legalized only in Nevada. However, at this time, there are 44 states that have either casinos managed by Indigenous tribes or commercial casinos.

Surpassing said threshold is common on slot floors today, and advocates of the change commented that the today’s number activates a stop of the slot machine till IRS paperwork requests are met, which includes filling a W-2G  tax form.

Relatedly, the Council officially wrote that the change must be made via regulatory action. The reason for this was that the initial threshold was established in the same way.

Obsolete threshold:

The bill initially proposed in 2023 by caucus to raise the threshold number wasn’t necessary according to the aforementioned ruling of the Advisory Council. During the interview, Titus commented that Danny Werfel, the Commissioner of IRS, should act in accordance with the decision by the Advisory Council and welcome change via the regulatory process.

In this regard, Titus commented: “That way, we wouldn’t have to get the bill passed. I feel like having the bill out there has been part of the reason he hasn’t made the change. But now, the commission has encouraged him to [increase the reporting threshold].”

When contacted to provide the comment, the IRS didn’t respond.

Furthermore, Rep. Guy Reschenthaler (R-PA) and Titus, co-chairs of the Congressional Gaming Caucus, commented in the letter issued on February 5 that the original slot jackpot threshold of $1.200 was out of date. As gaming has greatly extended its reach across America over the past 47 years, $1.200 jackpots have become much more frequent.

On that note, in the said letter, that bore the signature of 24 members of Congress involving 3 of Titus’ Nevada’s colleagues in the House, they added: “Taking this action will align with the IRS initiative to strategically use data to improve tax administration and modernize tax reporting for our constituents. Due to inflation, this outdated standard has significantly increased compliance burdens on taxpayers and operating costs for casinos across the country.”

What’s more, in her efforts to raise said threshold, Titus has long had the support of the American Gaming Association (AGA). In this sense, Bill Miller, CEO of the AGA, commented on February 13 that the Commissioner of the IRS should welcome the recommendation by the Advisory Council.

Commenting on this, he said according to The Nevada Independent: “The antiquated slot tax threshold creates unnecessary burdens for consumers, casino operators and the IRS.”

Regarding that recommendation, the Council recommended in its report that the today’s threshold for reporting jackpots from slot machines need to be $5.800 when inflation is taken into account. However, it could rise again in line with cost-of-living inflation adjustments every year.