IRS Filing Requirements For Tribal Casinos
Unincorporated Indian tribes and Indian tribes incorporated under either the Indian Reorganization Act of 1934, 25 U.S.C. section 477, or the Oklahoma Indian Welfare Act, 25 U.S.C. section 503, are not taxable entities for federal income tax purposes and therefore, have no federal income tax filing requirement.
Non-tribally owned management companies, state-chartered corporations (even if owned by tribes), and partnerships (even if tribes are partners) must file the income tax form applicable to the entity (i.e. Form 1120 for corporations, Form 1065 for partnerships, etc.).
All employers, whether management companies, tribal governments, or individual tribal members, must file all required employment tax forms for their gaming establishment employees. These forms can include Form W-2 (wages), Form 940 or 940-EZ (FUTA), Form 941 (FICA), and any other applicable forms. For additional information concerning employment taxes, consult the section in this handbook entitled “Employment Tax.”
Gaming operations, whether run by management companies, tribal governments or any hybrid combination, must file and pay excise tax on certain gaming activities, such as the 1/4 percent tax on amounts wagered on certain pull-tab operations and lotteries, and multi-race keno. In addition, sellers of these games are also subject to Occupational Tax (11-c).
For additional information concerning excise taxes, consult the section in this handbook entitled “Federal Excise Taxes.”
Should the tribe or the management firm be responsible for paying wagering taxes?
Tribal governments should be sure that any management contract spells out this responsibility. However, irrespective of any contract with a management company, as owners or beneficiaries of the gaming operation, the tribe is jointly liable for these taxes. If the management company defaults on its responsibility, or has no assets and finds itself unable to pay, the IRS will look to the tribe for payment. See, Rev. Rul. 69-21. 1969-1 C.B. 290.
Form 8300 – Report of Cash Payments Over $10,000 Received in a Trade or Business
Tribal trades or businesses (which include certain tribal casinos and gaming establishments) are required to file Form 8300 if they receive, in the course of their trade or business, cash in excess of $10,000 from any person in one transaction or two or more related transactions. “Cash” means United States and foreign currency and, under certain circumstances, cashier’s checks bank drafts, traveler’s checks and money orders that have a face amount of $10,000 or less. (See IRS Publication 1544, Reporting Cash Payments Over $10,000, for more detailed information.)
How long should the filer keep a copy of each filed Form 8300?
The flier must keep a copy for five years from the date filed.
Currency Transaction Reports for Casinos (CTRCs)
The Bank Secrecy Act (in Title 31) requires certain types of gaming establishments to file Form 8362, Currency Transaction Report by Casinos (CTRCs). Effective August 1, 1996, regulations issued under Title 31 include certain gaming establishments operated by or on behalf of Indian tribes within the reporting requirements of Title 31. 61 Fed. Reg. 7,054 (1996).
Tribal casinos subject to those regulations must file CTRCs and are no longer required to file Form 8300. In general, tribal casinos that have gross annual gaming revenue in excess of $1 million are subject to the regulations issued under Title 31.
Gambling – Reporting and Withholding
The rules for reporting and withholding of taxes from gambling winnings vary by the type of gambling.
Reporting: Form W-2G – Certain Gambling Winnings
Reporting is done in accordance with section 6041 of the Code. Forms W-2G are required to be filed on certain gambling winnings when the threshold amount of winnings is reached or exceeded. There is no exemption from this requirement for tribal gaming establishments. The filing requirements for Forms W-2G are as follows.
- Bingo or slot machine win — $1,200 or more
- Keno– $1,500 or more
- Lotteries, sweepstakes, wagering pools, horse races, dog races, jai alai, and other wagering transactions – $600 or more if the amount of the winnings is at least 300 times the amount wagered.
Withholding is required in accordance with section 3402(q) of the Code. Backup withholding is required in accordance with Treasury Regulation section 31.3406(g)-2(d) and Temporary Treasury Regulation section 35a.9999-3, Q&A 19 (effective until 1/1/97). In accordance with those regulations, backup withholding does not apply to any portion of reportable gambling winnings with respect to which tax is required to be withheld under section 3402(q). In any case in which the reportable gambling winnings are not required to be withheld upon under section 3402(q), backup withholding may apply. Thus, gambling winnings reportable under section 6041 are subject to backup withholding if the payee does not furnish a Taxpayer Identification Number (TIN) and no withholding is required under section 3402(q).
Withholding on gambling winnings, including backup withholding, is reported on Form 945, Annual Return of Withheld Federal Income Tax. Withholding requirements are as follows:
Withholding on gambling winnings, including backup withholding, is reported on Form 945. Annual Return of Withheld Federal Income Tax. Withholding requirements are as follows:
- Lotteries. sweepstakes, or wagering pools — Withholding is required on winnings of more than $5,000.
- Bingo, Keno and slot machine wins — Only backup withholding is required.
- Horse races, dog races, jai alai, and other wagering transactions — Withholding is required on winnings of more than $5,000, if the amount of the winnings is at least 300 times as large as the amount wagered.
FORMS 1042 AND 1042-S
These forms are required when gambling winnings are received by a nonresident alien. However, winnings from certain activities by a nonresident alien are exempt from the 30% withholding under section 1441 and 1442, but must be reported on Form 1042-S.
FORMS 1099 – INFORMATION RETURNS
There are different types of information returns for reporting non-employee (independent contractor) payments and for reporting other types of miscellaneous payments. Tribal gaming establishments are required to file the appropriate information return(s), just as any other trade or business is required to do.
Books and Records
Gaming operations must maintain all books and records necessary to establish any federal tax liability or to verify amounts required to be reported on information returns. When a management company is operating a gaming entity for the tribe, the management company must keep its own set of books on the gaming activities, separate from that of the tribe.
Often there is only one set of books. This may mean that an IRS employee, in an examination or compliance review of a gaming entity or the management company operating that gaming entity for the tribe, may ask to see records that are technically the property of a tribal government. Sensitivity must be shown by the IRS employee to request only those records deemed relevant to the present inquiry. Tribal governments should be encouraged to cooperate as fully as possible and should be reassured that this is not a challenge to tribal authority.
What books and records are required to be kept by tribal gaming operations?
Tribal gaming operations are required to keep all books and records and financing information that were used in preparing federal income, employment, excise, or information returns. This may include detailed source documents, cash receipts and disbursements journals, sales and accounts payable journals, journal entries, general ledgers, pension records, and copies of information returns.
How long are tribal gaming operations required to retain books and records for a particular tax year?
Records must be retained as long as the contents may be material in the administration of any Internal Revenue law. This usually means as long as the statute of limitations has not expired on the applicable tax year for income tax (generally, three years from the filing or due date of the return) In addition, Employment Tax Regulations specify that records must be preserved for at least four years after the due date of employment tax returns, or, if later, four years from the date when the tax was paid.
Note: The majority of the above information has been obtained from the IRS Handbook for Indian Tribes.