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IRS Crackdown on Gambling and Gaming Leads to Prosecution of Boston Police Officer

Hot Topics, Offshore Account Update

Posted on June 16, 2022 |

The Internal Revenue Service (IRS) is cracking down on taxpayers suspected of failing to report income from gambling and gaming activities. This includes individual taxpayers suspected of failing to report winnings as well as casinos and other businesses suspected of underreporting their gaming-related revenues. Recently, this crackdown hit home in Boston, when a local police officer pled guilty to gambling-related tax fraud. Here are some important insights from Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Boston Police Officer Charged with Failing to Report Gambling Winnings to the IRS

On April 7, 2022, the IRS announced that a Boston police officer has agreed to plead guilty to failing to report gambling winnings on his tax returns. According to the IRS, in 2020 the police officer sold a winning lottery ticket worth $10,000 for cash rather than collecting the lottery winnings. The police officer then failed to report the winnings on his annual income tax return, “result[ing] in an additional tax due and owing for that year of $1,800.”

As of the date of the IRS’ announcement, the police officer was awaiting sentencing, with a maximum sentence of one year in prison and a $10,000 fine on the table.

The IRS is Prioritizing Gambling and Gaming Enforcement in 2022

If this doesn’t sound like a case that is particularly worth highlighting (and certainly not in a national press release issued by the federal government), you’d be right—except for the fact that it shows just how seriously the IRS is prioritizing gambling and gaming enforcement in 2022. If the IRS is pursuing criminal charges against a Boston police officer for underreporting $1,800 in tax liability from a lottery ticket, you can be sure that it is pursuing criminal charges in many other cases as well.

While gambling and gaming enforcement has long been an IRS priority, the IRS currently seems to be giving this area more attention than usual. This is likely due in large part to the growing number of casinos in the United States as well as the continuing rise of online gambling and gaming. Existing businesses can expect to face scrutiny they haven’t faced previously, and new businesses in these industries will need to be extremely careful to avoid garnering unwanted attention from the IRS.

Individuals who have gambling and gaming winnings also need to make sure that they are fully satisfying their tax obligations. As the Boston police officer’s case shows, the IRS is not solely focused on high rollers (although it is certainly more likely to scrutinize high rollers’ tax returns). Failing to report taxable income from any source can lead to allegations of tax evasion or tax fraud, and these allegations can lead to civil or criminal charges depending on the circumstances involved.

Request a Confidential Consultation with Boston Tax Attorney Kevin E. Thorn

If you have concerns about dealing with the IRS in relation to your (or your company’s) gambling or gaming activities, Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, can help. To request a confidential consultation, please call 617-692-2989, email ket@thornlawgroup.com or contact us online today.

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