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U.S. Casinos and Currency Transaction Reports

February 14th, 2011 Leave a comment Go to comments

There are various ways for the IRS to receive notice of gambling winnings.  Last December I covered some situations requiring the issuance of a Form W-2G to the recipient of gambling winnings, a form the IRS also receives.

Receiving a W-2G is not the only way the IRS is notified of gambling winnings.  The Bank Secrecy Act requires United States casinos generating more than $1,000,000 in annual gaming revenues to report to the IRS certain large cash transactions.  It doesn’t take a gaming expert to realize that many U.S. casinos meet the threshold.

Whenever a casino patron engages in a cash transaction involving more than $10,000 in a single gaming day, the casino must file with the IRS a FinCEN Form 103, Currency Transactions Report By Casinos.  “Cash transaction” includes either cash ins or cash outs, and separate forms are filed for each transaction.

Each form contains the taxpayer’s identification information.

So you say, OK, I’ll just make smaller cash transactions, such as $3,000 at a time, then the IRS won’t be on notice of my dealings.  This scheme is called “structuring,” and is illegal.  Engage in structuring, and you may serve time.

If a casino has knowledge of smaller cash transactions the combination of which result in excess of $10,000, it must aggregate the multiple transactions into a single transaction.  Although I can’t say I have seen cash deposit and withdrawal tracking systems of a U.S. casino, I would be very surprised if a casino generating at least $1 million in gaming revenues lacked the technology to easily identify such transactions.

If you are caught structuring, the casino may be required to file a FinCEN Form 102, Suspicious Activity Report by Casinos and Card Clubs, within 30 days of when the activity is detected.  Form 102 is required for suspicious activities involving $5,000 or more in funds, either in a single or aggregated transaction.  Casinos may, but are not required to, file the Form 102 if the amount involves less than $5,000.

When a casino files the Form 102, the casino is prohibited from informing the patron that one has been filed.  The patron will almost certainly find out eventually.  Don’t be that person.

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