The Senate voted yesterday to ease the 20 per cent withholding requirement on race track, dogtrack and Kai Alai winnings.
Under existing law, when any bettor wins $1,000 or more, the track or arena is required to withold 20 per cent of the winnings on the spot and turn it over to the government to help make sure the better pays the federal tax on grambling winnings.
Under the provision approved yesterday, the 20 per cent of the winnings on the spot and turn it over to the government to help make sure the better pays the federal tax on gambling winnings.
Under the provision approved yesterday, the 20 per cent withholding requirement will apply if the winnings are $1,000 or more and the odds on the bet were at least 300 to 1.
The Internal Revenue Service had said the earlier provision was burdensome and unenforceable, according to senators sponsoring the amendment to the tax bill. Tracks had found it difficult to administer.
Walter Huddleston (D-Ky.), who sponsored the amendment, also said the existing rule, by applying to any $1,000 winnings, prevents some of the money won early in the day from being bet on later races, thereby reducing the "handle". Huddleston and consponsor Wendell Ford (D-Ky.) were anxious to have the Senate approve the amendment before the Kentucky Derby May 7. He said even if the amendment isn't through Congress by then, it will informally let Churchill Downs follow the new rule on Derby Day.
Huddleston said the amendment, adopted as part of the overall tax-cut bill, won't change an existing rule that a bettor immediately report winnings of $600 or more.
The new withholding rule, like the old can be evaded by the bettor buying two or more $2 tickets on the same horse and cashing them at different windows.