08/06/2009 11:00PM

Withholding bill introduced in Senate


A senator from New Jersey introduced a federal bill on Thursday that would repeal the 25 percent withholding tax on parimutuel winnings of $5,000 or more and also raise the threshold for reporting parimutuel winnings from $600 at odds of at least 300-1 to $1,200 at 300-1 or greater.

The tax provisions are components of a larger bill that would also allow for Internet gambling on "games of skill," such as poker. The bill also contains explicit protections for Internet gambling on horse racing, which is currently the only legal form of gambling over the Internet.

The bill, introduced by Sen. Robert Menendez, a Democrat from New Jersey, is similar to legislation introduced to the House earlier this year by Rep. Barney Frank, a Democrat from Massachusetts, that would allow licensed operations to conduct gambling operations over the Internet.

Under the tax provisions contained in the bill, bettors would benefit by having fewer high-paying bets reported to the IRS. Bettors would also benefit because their bankrolls would not be reduced by automatic tax withholding, and by allowing bettors to offset winnings with losses at the end of the year more properly.

Federal legislation that expands gambling or changes tax rules to the benefit of gamblers has in the past proven difficult to pass, and the bill, like the Frank legislation, is expected to face an uphill battle for passage.