Ok, here’s something I’m wondering about. If you win a big prize at a casino, race track, or lottery, presumably they will ask for your identity for tax purposes.
Supposing you had no way to prove your identity, or refused to prove your identity. Do you still get the prize?
For example, an illegal immigrant with no passport or driver’s license discovers a discarded scratch-off ticket worth $100,000 and wants to cash it in.
Or a Mr. Dale Gribble of Arlen Texas wins $10,000 at a casino slot machine. Fearing a secret conspiracy between the casino commission, the federal government, and space aliens, he wisely insists that he is actually a Mr. Randy Shackleford. (who happens to be a real person and Dale gives the correct address, telephone, and SSN info) Can he collect the prize and Mr. Shackleford finds himself with a tax liability?
Supposing Karen Walker bets the horses and wins the trifecta. She claims her name is Anastasia Beaverhausen. (with random address, telephone and SSN info) Can Karen collect the prize?
I realize in a lot of cases, they will give you the prize, but withhold a chunk of it for the IRS anyway. But the withholding (say 30%) could be less than what Karen Walker would normally pay (say 50%), so Karen would come out ahead if she claims she is a citizen of Vanuatu.
I know the circumstances play a big part in this. It seems they don’t even report winnings at certain table games, like blackjack. So without ID, which prizes would:
A) Not be paid out
B) Paid out, but reduced by withholding
C) Paid out in full
Twice I have hit trifectas at a dog track that were large enough to require reporting. They will not pay unless you have a photo ID and an ID with a Social Security number on it.
I asked what would happen if someone with no ID hit such a trifecta. They told me that the winning ticket remains valid for some length of time. The winner could go home, pick up their ID and come back another day to collect their winnings.
Of course, a winner that was truly without ID could always find a friend that has ID to cash in for them, or it’s not hard to find someone that will purchase a winning ticket at a discount and cash it themselves.
I think casinos operate differently, but I don’t have any first hand knowledge about that.
But there’s something that this doesn’t explain: what about all those tourists in places like Vegas, people who often comes from other countries on vacation. Presumably most of them don’t have a US Social Security Card. Do they just have to leave their winnings behind?
I seem to remember a TV show that touched on this. Over the trigger amount in a casino, they will withhold whatever percentage the IRS deems right. Then you get the rest. If you are a furriner, you then can file your winnings in your home country and pay taxes on them there as well. The IRS is going to get their cut no matter what. If you live in tax-free Monaco, and hit a slot machine in Vegas for 12 million, you are still going to owe the IRS on that payoff. And they will take it up front.
Your passport is sufficient ID in cases like that.
Actually, if you’re not a professional gambler (i.e, if you just go on vacation and hit a one-off casino jackpot) then Australia won’t tax your winnings. Lottery winnings aren’t taxed there either.
I’ve never won big prizes at a casino or in a lottery, but I HAVE won some large prizes through trivia contests.
Whenever that’s happened, prize coordinators have sent me a registered letter filled with documents that I have to fill out and sign in front of a notary, as well as some forms for the IRS.
So, if I was not prepared to present legitimate ID and my SSN in front of a notary, I wouldn’t have been able to collect my prizes.
Any contest that’s on the level will follow a similar approach.
