It can be challenging to ensure tax compliance among gamblers, a group that is self-selected for being risk-tolerant. The IRS must prioritize compliance in this area to send the message that failing to report winnings is a losing bet.
To increase compliance, the IRS must make gambling winnings a near certain predictor of at least a correspondence audit and cursory review of the return. Gambling establishments send the IRS information on winners and payouts—that’s how a recent Treasury Inspector General for Tax Administration report was able to determine how much in winnings has gone unreported.
For the bulk of ...
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