Benjamin Franklin, one of the founding fathers of the United States famously said “In this world, nothing can be said to be certain, except death, and taxes.” Anyone that has ever had the misfortune to run afoul of the IRS can confirm Franklin’s sentiments. Gamblers are especially vulnerable and most are not familiar with the fact that all gambling winnings are subject to taxation. In 2008 Miami Florida residents John Ricone and Francys Tolon-Ricone went to play bingo at Miccosukee Resort & Gaming Indian casino. The couple was lucky and won $5,500.
When the Ricones cashed out the casino deducted $1,500 out of their winnings for taxes. The Ricones were under the impression that they had fulfilled their obligations to the IRS when that got a very nasty surprise. When they filed their taxes for 2008 they learned, much to their horror that the tribal casino had failed to remit the $1,500 they had deducted to the IRS. The IRS told the couple they are responsible for paying the $1,000 plus interest. The Ricones are suing the casino and many are wondering if the casino is ripping off other players.
According to their lawsuit the Ricones won $2,961.66 in February 2008 and the tribe deducted $829.26 for federal income taxes. During another trip in July the couple won $2,500 and the tribe deducted $700. In 2010 the IRS told the Ricones that they owed $1,621 with interest because the tribe never remitted the money to the IRS. Tax troubles are nothing new for the Micosukees. Over 100 tribal members owe the IRS a total of $26 million in unpaid taxes. Billy Cypress, the former tribal chairman owes almost $3 million from after using Miccosukee credit cards to go on a three year spending spree. The tribe is fighting with the IRS and is claiming “sovereignty.” The tribe is also suing their former attorneys Dexter Lehtinen and Guy Lewis. The tribe claims that both lawyers told the tribe they did not have to pay federal taxes.
There are many misconceptions surrounding gambling and taxes. All winnings are taxable even for innocuous games such as internet bingo. In fact all income is taxable and the United States tax code says that gross income is “all income from whatever source derived.” When dealing with the IRS honesty is usually the best policy and trying to deceive the taxman can be very costly.