Comment from Fung, Henry

Pursuant to the rules of 26 CFR 601.601(a)(3) I wish to make two minutes of public comment on this item. My comment will focus on the OBBBA section 70114(a) and treatment of wagering losses, which will cause individuals like myself to be taxed with phantom income. To avoid taxation of phantom income, I propose amending the definition of "information reporting period" to be at the discretion of each payor (casino), not to exceed one calendar year. "Information reporting period" is not defined in statute and is within the purview of the IRS. Today's slot club cards are sophisticated and offer a high degree of detail of tracking of wins and losses. Almost every casino provides records of net annual wins or losses at the end of the year. The regulations should propose that those records are a rebuttable presumption of the gains or losses at each casino for the information reporting period. Casinos should be allowed to use an aggregate reporting method of up to one calendar year, and issue one W2-G form at the end of the year reporting annual gains if over $2,000 similar to that of W-2's obtained through employment. If a casino does not have a patron's social security number, backup withholding would be required when the $2,000 threshold is crossed. Many casinos already require human cashier involvement when large dollar tickets are cashed due to anti-money laundering laws, and so requiring a W-9 to be completed to cash a ticket over $2,000, presenting a valid player's club card, or imposing backup withholding at the time $2,000 or more in tickets are cashed would not be a significant burden. It would be more than compensated and paperwork reduced by casinos not filing W2-G's for any individual wins over $2,000. This is a large burden especially for high limit video poker players and casinos who serve them, who may be betting $25, $75, $100, or even $500 a spin and receiving a "jackpot" of less than ten times their bet. The change in "information reporting period" also aligns with all other information reporting periods in the Internal Revenue Code, most of which are either calendar year or a company's fiscal period. Proposed 26 CFR 1.6041-10 (2) to read as follows: In general. For purposes of paragraph (g) of this section, the “information reporting period” begins when a patron places the first wager on a particular type of game at a gaming establishment, as defined in paragraph (b)(2)(iv) of this section, and ends when the patron places his or her last wager on the same type of game at the same gaming establishment before the end of the “information reporting period.” An information reporting period is ***a period selected by the payor, not to exceed one calendar year. Time is determined by the time zone of the location where the patron places the wager. A payor must use the same information reporting period to report all “reportable gambling winnings” paid during the calendar year. Once selected, a payor may not change its information reporting period during a calendar year. Any changes to a payor's information reporting period from one calendar year to another must be implemented on January 1.*** Through the filing of one W2-G per casino per calendar year (as I expect most casinos to use the calendar year as the information reporting period), the administrative burden will be further reduced and result in substantially more than the $445 million in projected savings of monetized hours in the Paperwork Reduction Act. It does not require change in statutory law, and aligns with the spirit of the act to only tax net wins per casino, while net losses at other casinos will still be subject to the 10% reduction in deduction (90% rule). Sincerely, Henry Fung