03/29/2017 3:29PM

Public-comment period for proposed tax rules ends Thursday


A public-comment period on proposed new rules for the tax treatment of parimutuel winnings expires on Thursday, and 4,000 comments in support of the rules have been logged so far, according to an official with the association that organized the lobbying effort behind the rules.

Keith Chamblin, the chief operating officer of the National Thoroughbred Racing Association, said the NTRA is drafting a final submission in support of the new rules to be filed on Thursday, the expiration date of the 90-day public-comment period. The final submission will suggest a definition for when the new rules should take effect and address several issues surrounding the new rules that had not been previously discussed by the NTRA, Chamblin said.

The NTRA remains confident that the new rules will be enacted this year, but the organization is backing away from an earlier estimate that the regulations will be in place this spring, citing widespread shortages in manpower at federal agencies under the new presidential administration. The rules will be put in place in their final form by the Treasury Department and the Internal Revenue Service. The IRS, in particular, has been targeted for massive funding cuts in a proposed budget from the current administration.

“We fully believe that these proposed regulations will be put in place, but we don’t know exactly when,” Chamblin said. “That’s something we will be keeping an eye on.”

The rules would significantly raise the triggers for both reporting and withholding requirements for winning parimutuel wagers by allowing bettors to use the total amount wagered in a single pool when determining the odds of the payoff. Current rules require reporting of winning wagers at greater than 300-1 odds, regardless of how much the player bet, while automatic withholding is triggered on any bet with a total payout of $5,000 that also pays off at greater than 300-1 odds.

The rules likely will greatly reduce the number of wagers that trigger the reporting and withholding requirements, especially for exotic bets like the trifecta and horizontal wagers like the pick four and pick five. Bettors typically target those bets using large arrays of combinations.

The NTRA, which is funded by a broad cross section of industry constituencies, began lobbying the Treasury Department and the IRS to change the requirements several years ago, deliberately bypassing the legislature because of earlier unsuccessful attempts in those chambers. Chamblin said he has not heard of any objections being mounted to the proposed rules during the comment period.

“We do not know of any opposition, organized or unorganized,” Chamblin said.

During an earlier public-comment period asking Treasury and the IRS to consider the changes, nearly 11,000 individuals responded in favor, according to the NTRA. Chamblin said that the lower number of responses during the current public-comment period did not disappoint the NTRA because it deliberately avoided calling for public comments after the number reached what the NTRA considered a critical mass.

“We think a larger number of public comments will actually delay enactment because they have to go through each and every one,” Chamblin said.