Discussion:Gambling winnings - assuming other peoples winnings
From TaxAlmanac
Discussion Forum Index --> Advanced Tax Questions --> Gambling winnings - assuming other peoples winnings
Discussion Forum Index --> Tax Questions --> Gambling winnings - assuming other peoples winnings
| 22 May 2008 | |
| A client came to me with the evidence of over $100,000 worth of gambling winnings. The client had loaned her personal ID to others. Now the tax bill is well over 30,000 and of course she has no money. Any suggestions? | |
TheTinCook (talk|edits) said: | 22 May 2008 |
| Does she have some sort of proof of this? The cure might be worse then the problem.
Failing that, can she document any losses? | |
| 22 May 2008 | |
| There used to be (probably still is) a scam against the IRS where a big-time winner would pay another to use their SSN and to claim winnings as theirs when, in fact, they were not. The person using their SSN was called a 10 percenter (the usual fee for doing this), and they have been charged by the Government in the past for engaging in tax fraud.
You don't indicate what you mean by "client had loaned her personal ID", but if it's in the nature of acting as a 10 percenter, her biggest problem may not be her tax bill, it could be the US Attorney's office. Obviously, she shouldn't report income she didn't receive, and she can't deduct losses she didn't have against winnings she didn't have. If this is a scam she participated in, a referral to a good attorney may be the best bet. | |
| 22 May 2008 | |
| The casinos record everything by camera. The IRS can get proof as to whom the winnings belong to. She can prove that the winner was someone else. | |
| 22 May 2008 | |
| I'm thinking that even if someone else had her SS# they can't assign income to another person to avoid tax. I'm not sure how you "loan" out your personal ID, but if she was paid for this it smells like fraud to me. | |
| 22 May 2008 | |
| Sounds to me like a normal down-on-her-luck, depressed, inveterate gambler. I was talking with an IRS appeals officer the other day, and he remarked that in his 30+ years experience, he had never seen anyone who didn't lose more than they made.
IRS is well aware of this problem, as are the casinos. I'd bet there are dozens of websites or blogs that cover this topic extensively. | |
| 23 May 2008 | |
| It probably is a normal down-on-her-luck, depressed, inveterate gambler. It's also one who committed tax fraud. As one book on forensic accounting puts it, the 10 percenter is committing two felonies - tax evasion and making a false statement (the W-2G is signed under the penalty of perjury and also states the individual signing it is the one entitled to the payments.)
The fact that the IRS can get proof through cameras or otherwise might negate the 10 percenter of the obligation for the tax (and it will be the client, not the IRS who will need to get it initially for the audit), but it doesn't eliminate the felonies. The IRS has been serious about these in the past, as have state tax authorities. | |
| 23 May 2008 | |
| Suggest you send her to an attorney. Even if you are a Cir 230 tax preparer (CPA or EA) your discussions in a criminal matter are not privileged (only an attorney). If you are not a Cir 230 ... discussions are not preiviledged period.
--Snowbird 12:22, 23 May 2008 (CDT) | |
| 23 May 2008 | |
| I had a client who made 40 k a year but lost 100+k over the past year =). Money came from 401k, cancellation of life insurance, all her credit cards, and loans. | |
| 24 May 2008 | |
| Thanks everyone! I will suggest she contact an attorney. Just a bit more about this case: this happened in 2002 and 2003. Since that time she is a recovering drug addict, has a job and is taking care of her children, plus paying off the debts of her past life. I did help her file a tax return for 2002 and 2003 using the IRS transcripts of her earnings. I didn't ask her a lot of questions about the previous years and I don't think she remembers much about them and wants to get past them. | |
