Poker News

If you’re a poker player in the United States, then you know that April 18th is Tax Day this year. With a little over one month to go, players have been scurrying around to collect profit and loss information from online poker sites and weed through their bank accounts searching for deposits and withdrawals. This year, the task will be a little easier, as the Foreign Bank Account Form (FBAR), or Form 90-22.1, is no longer necessary.

Poker News Daily caught up with poker tax expert Ann-Margaret Johnston to get the inside scoop on the latest change from the IRS.

In essence, players no longer are required to disclose their offshore online poker accounts to the IRS. However, those who have Neteller, QuickTender, ePassporte, or similar accounts with over $10,000 in them at any point during the year are still required to report them using the form.

Johnston explained the logic behind Form 90-22.1: “The FBAR reporting requirement came about so our government will know about accounts we have that aren’t in the U.S. It’s like an honor system. They’re trying to get you to tell them; otherwise, they’d have no way of knowing they exist.”

Players who failed to report their online poker accounts could have been subject to stiff penalties ranging from $10,000 to $100,000. Johnston detailed what could happen if the IRS found out that members of the poker community held funds in unreported offshore accounts: “The worst case is they decide to audit you, say you didn’t report it, and fine you $100,000. That was enough to make people report them.”

Some in the poker population theorized that if they filled out Form 90-22.1, the IRS would almost certainly audit them. Johnston rebuked the myth: “The theory was it guarantees you an audit. I haven’t had any of my guys audited, though, which is good. Even though the new standards took effect on February 24th and go into law this month, I’m still telling my players not to worry about it for their 2010 filings.”

In an article that appeared on PocketFives.com, Johnston gave poker players a reason to smile about the changing IRS requirements: “This is an incredible victory for poker players. Not only do you not have to pay someone like me to do the form, you don’t have to send your ‘less than mature’ screen name to the government!”

As noted earlier, players who have e-wallet accounts should likely still report their existence if the funds inside them topped $10,000 during the year. “The IRS is redefining the definition,” Johnston clarified. “You still have to report an account with shares issued to the public. Any bank account has issued shares, which is why it’s still necessary to report Neteller, Quicktender, ePassporte accounts.”

On the fine line between a bank account with shares and an online poker account, Johnston enlightened us by saying, “e-wallets and banks have investors in them, whereas PokerStars and Full Tilt will tell you they’re not a bank.”

Johnston’s roster of clients includes players in 30 states. She told Poker News Daily that ascertaining wins and losses are important for professional players: “If you’re a pro, you can net your wins and losses, so it’s a matter of trying to find expenses.”

Johnston has been in accounting for the last 25 years and formed her own practice in 1995. She’s an avid poker player and can be found under the screen name “CPAEvil” on PokerStars and “EvilCPA” on Full Tilt. She made waves during the 2010 PokerStars Caribbean Adventure in the Bahamas after taking third in the series’ $1,000 Ladies Event for $9,300. Vanessa Rousso eventually took down the tournament after edging out Halli Pinson heads-up.

Check out Johnston’s website, PokerDeductions.com, to learn more.

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