U.S. TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, September 30 2024
What TIGTA Found The IRS has not enforced income tax return filing requirements for recipients of millions of Forms W-2G, Certain Gambling Winnings, reporting billions of dollars in gambling winnings. TIGTA reviewed all Forms W-2G issued to individual taxpayers during Tax Years (TY) 2018 through 2020 (as of March 2023) and found 148,908 individuals who were issued Forms W-2G with a total amount of more than $15,000 per individual in gambling winnings and did not file a tax return. These nonfilers were associated with approximately $13.2 billion in total gambling winnings. Further TIGTA analysis determined that 139,045 of these nonfilers were included in the IRS’s nonfiler case creation process inventory. In response to our audit work, the IRS analyzed 17,436 TY 2018 high-income nonfilers with total positive income greater than or equal to $100,000 and calculated that it could potentially increase tax revenue by approximately $1.4 billion through addressing the 139,045 individual nonfilers with gambling winnings. In addition, hundreds of Forms W-2G do not include a Taxpayer Identification Number (TIN) required to trace the income to the recipient. Finally, the IRS has few processes in place to identify potential excise tax noncompliance by entities accepting wagers, particularly in emerging areas such as online sports wagering.
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