IRS Form 730 - Monthly Tax Return for Wagers
The Form 730, Monthly Tax Return for Wagers, is used to declare the tax liability on bets and wagers. Companies with wagers and organizations that conduct lotteries need to file the Form 730 on a monthly basis. The IRS Form 730, taxes on wagering are used to compute excise taxes for both legal and illegal wagers of certain types. For state authorized wagers placed with bookmakers and lottery operators, there is a tax of 0.25% of the wager, if it is legal. If the wager is not legal, the tax is 2% of the wager.
Who Must File Form 730?
An individual must file the Form 730 and pay the tax on wagers under the Internal Revenue Code section 4401(a) if:
- The tax filer is in the business of accepting wagers.
- The tax filer conducts a wagering pool or lottery; or
- The tax filer is required to be registered and received the wagers for or on behalf of another person but did not report that person's name and address.
- Use Form 11-C, Occupational Tax and Registration Return for Wagering.
When to File Form 730?
If you are liable for the tax, you must file Form 730 for each month by the last day of the following month for which you are reporting taxable wagers. IRS doesn’t send any Form 730 tax return notice about due dates. If you are not liable to report taxes, then you must enter “None” in line 6, and sign the date.
Taxable Wagers Excise Tax Form 730
What is Taxed?
This tax is applicable to the wagers who are accepted in the country of United States or placed by a person who resides in the country with a person who is a U.S. resident or has the citizenship of the country. Taxable wagers include:
- A person engaged in the business of accepting wagers on a game contest or a sports event.
- In a wagering pool on a game contest or at the event of sport, in the case when the pool brings profit; or
- In a lottery, that fetches profit. This includes the punchboards, the numbers game, policy, and similar types of wagering.
Sports Event: Included under sports events, there is every type of amateur, scholastic, or professional sports competition, such as: auto racing, basketball, baseball, bowling, billiards, boxing, cards, checkers, croquet, cricket, dog racing, football, gymnastics, golf, hockey, horse racing, lacrosse, rugby, squash, soccer, tennis, tug of war, track, and wrestling.
Contest: A contest is analogous to any competition involving quality, speed, endurance, politics, strength, skill, or looks. This includes events like elections , the result of nominating conventions, log-rolling contests, dance marathons, weightlifting contests (muscle building contests), wood-chopping contests, beauty contests, and spelling bees.
Wagering Pool: A wagering pool, which is organized for the purpose of profit, includes any technique or theme for providing prizes to at least one or a lot of winning bettors supported by the end result of a sports event, a contest, or a mix or series of those events or contests if the wagering pool is controlled and conducted for the aim of creating a profit.
A wagering pool or lottery could also be conducted for profit even though an instantaneous profit doesn't occur. If a person operates the wagering pool or lottery with the expectation of a profit within the variety of inflated sales, attendance, or different indirect advantages, it is being conducted for profit.
Lottery: Under the lottery section, it includes the punchboards, number game, policy, and similar varieties of wagering. Generally, a lottery is conducted for a gain (profit) that includes any methodology or themes for the dispersion of prizes among the people involved in the wagering, or securing an opportunity to win the prizes. The winning prizes square measure is typically determined by the drawing of numbers, tickets or symbols, from a wheel or alternative instrumentality, or by the result of a given event.
What is Not Taxed?
The tax is not obligatory for the following five items.
- Pari-mutuel wagering that includes jai alai, racing of dogs and horse, particularly when gambling is licensed under the specific state law.
- Coin-operated devices that are used for gamble. This may be slot machines, pinball machines, or video games.
- State agency that conducts the sweepstakes, lotteries or wagering pools, and if the particular wager is associated with the state agency or employees or its authorized agents.
Credit for Overpayment Taxes
The tax filer can claim a credit for any overpayment of tax. But the claim must be made within 3 years from the time the Form 730 is filed, or 2 years from the time the tax was paid, whichever is later.
No credit is permitted unless a statement of the facts involving the overpayment that includes the following information is attached:
1. An explanation of the reason for claiming a credit.
2. The payment date and the tax amount.
3. The amount involving any previous claims, or any part, has been filed.
4. A statement that you:
- Have not collected (whether as a separate charge or otherwise) the amount of the tax from the person that placed the wager on which the tax was imposed, or
- Have repaid the amount of the tax to the person that placed the wager, or
- Have the written consent of the person that placed the wager to the allowance of the credit. The consent must be attached to the return.
Credit for Wagers Laid Off byYou
If the tax filer accepts a wager and lays off all or a part of that wager with a person who is liable for tax, follow the rules below to claim a credit depending on whether or not you paid the tax.
If an individual has not paid the tax, then he/she can claim a credit on the Form 730 in the amount of the tax due for the laid-off wager, if the certificate described in Regulations Section 44.6419-2(d) is attached to the Form 730 for the month during which the wager was accepted and laid off.
If an individual has paid the tax, then he/she can claim a credit for the tax paid on the laid-off amount. Note that the claim should be filed within 3 years from the time the tax was filed or 2 years from the time the tax was paid, whichever is later. Interest will not be allowed on a credit for the tax imposed on a wager that the tax filer laid off.
No credit is allowed to the return for each laid-off wager unless the following information is attached:
1. The certificate described in Regulations Se ction 44.6419-2(d).
2. A statement that includes
- the reason for the credit,
- the month in which the tax was paid,
- the date of payment, and
- Whether any previous claim covering all or part of the amount involved has been filed.
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