The National Bank of PokerStarzistan?

IRS says report your online bankroll as a foreign money account

by , Feb 24, 2009 | 8:33 am

With banking matters all over the place these days, the IRS reportedly investigating Russ Hamilton, and Barney Frank putting together a bill that would simply strike down the UIGEA as if it never happened, I gotta think, well … I really don’t know what to think. Though it seems major shifts are happening, global-economic finance is admittedly a little beyond my ken. But I’m trying to figure it out, and so far I’ve concluded that banks are clearly important, and anyone who handles the transfer of billions of imaginary dollars has major issues to attend to.

Brilliant, I know.

And actually, not even billions … just $10,000 or more. Apparently a new IRS rule has gone into effect that requires online poker players to treat their online accounts — PokerStars, Full Tilt, et al. — as offshore foreign bank accounts.

Yeow, that’s different. Sources who were winning players online tell me nothing more than a WG-2 was necessary before. Again, I’m not really sure what that means (or what enforcement mechanisms are in place) but do I know this change theoretically affects lots and lots of people and probably at least a few billion dollars. If I’m reading this tax expert right, basically, if all your money in all your accounts added up to $10,000 or more at any point in 2008, you have to file a special form (TD F 90-22.1, which goes to the Dept. of the Treasury, not the IRS) for these accounts, and the fine for not doing so is either $100,000 or half your bankroll, whichever is greater.

That sounds pretty tough. But maybe this is just what comes with the territory as G-men set up a framework for how these online piggy banks, er, poker sites have to work in the future? No word yet on whether or not you’ll ever be able to pay your taxes in PokerStars W$/T$ or Lindens.

8 Comments to “The National Bank of PokerStarzistan?”

  1. Kevin Mathers

    Russ Fox has been talking about this since at least since 2006, when he mentioned this with Neteller.

  2. Poker Shrink

    I have been waiting for IRS to go after all those Neteller accounts that were over $10K, since they have all of that information. But so far, nothing.

  3. DanM

    Is Russ Fox a kook?

  4. Kevin Mathers

    Russ Fox knows his stuff, he’s far from a kook. He also wrote what you’re referencing.

  5. Jason B

    Stop me if I’m wrong here but am I to interpet this article that the US treasury wants me to claim money on my poker accounts that hasnt been actually put in US banks but actually sits in interest free account? I understand that if I withdrawal $5K a month I would have to file on the 60k to the IRS but if I have 180K on a site that isnt collecting interest, why would I tell anyone especially a governmnent agency that I have this money. What benefit does it provide to either party?

  6. DanM

    ah, glad to hear he wasn’t some loony. I had the following in there for the last graf, but cut to shorten:

    All this comes, by the way, from Russ Fox, E.A., whom a well-informed and trustworthy friend tells me is well-informed and trustworthy on these matters and very likely not a kook. So take that for what it’s worth. I think this is either a super-duper big deal or not a big deal at all.

  7. DanM

    @Jason B

    I think they’re just trying to track the money. After all, that’s what’s really at issue here — what constitutes actually money, and what country is it in?

    Everything banking is changing this century. Even the Swiss are no longer protecting people.

  8. Steve L

    ok, so here’s the work around for us who don’t make millions online. Take the number of poker accounts you have online (Full Tilt, PS, etc) and divide $10,000 into that number and make sure you don’t go above that balance. In other words, if you have 2 online accounts, make sure you never have a balance above $5,000 in either one of them.

    I think what Russ is saying about the timing of your accounts, is if you have $5,001 in PS and zero in Full Tilt on March 1st and zero in PS and $5,001 in full Tilt on Sept 1, you must report…. even if you didnt have $10,000 in combined account at one time it is the total of all the different high dollar points in the several accoutns that matters.