I am trying to research the methods other casinos use to aggregate taxables for purposes of issuing 1099's.
Our casino has monthly cash drawings. A guest earns a chance at various cash amounts for each stipulated amount of gaming done in the past month. Our marketing department has kept the amounts under $600 to eliminate filing 1099's. If a guest were to win $200 3X in one year, a 1099 would not be issued. I believe this to be incorrect. How does your casino handle such situations? If you track winnings and issue 1099's at year end, do you feel the need to inform guests that this may happen?
We also reward guests for repeat visits by offering them a chance to print a voucher at the kiosk for an amount of cash dependent on their past level of play. This is a cash pay-out not requiring play that day. Does anyone else offer a similar program? Do you track the pay-outs by guest name and track for aggregation on a 1099?
We track all single payouts of $100 or more so that if a guest were to aggregate to $600 we would not miss the 1099 at year-end. We felt that tracking payouts less than $100 was a bit much to ask and the risk of missing the 1099 on multiple payouts of less than $100 accumulating to $600 was not that great. As far as informing the guest, I think you should just include a disclaimer on the prize payout form stating that a 1099 will be filed if $600 in accumulated winnings is achieved through the year.
As far as the cash reward program you have, my casino does not offer such a program so I cannot offer any advice there.
Thank you so much for your input on this question! I quite agree on the risk of missing an aggregate amount of $600 on small payouts, but was unsure if the IRS would buy that as an argument. Do they care how much trouble we have to go to? Especially when we have the technology to collect all data? Can you share if you have ever been audited on this particular issue?
As someone who spent some time at the IRS, generally it was believed that it did not matter how much trouble something was. If it was available then it needed to be done. I think we can relate to that with FinCEN's insistence that we collect slot machine bill-in information for T31 purposes. It was a business decision that my casino made to not track prizes paid under $100. I guess the risk of fine was less than the effort it was going to take to track all of the smaller payouts.
As far as the verbiage, I'll see if I can get something for you, but I no longer work for that entity so I'm not sure they'll want to share. That being said, I think we just pulled language from the 1099-M Instructions manual.