Casino Procedures for Foreign Visitors

A. R. of Chicago writes:

"A recent trip to Harrah's Casino in Joliet proved to be a mixed blessing for one member of our party. In October I was aboard the Southern Star with relatives who were visiting from Mexico. All was going well until I wandered away to play in the next aisle; suddenly I realized that my cousin had hit big on his machine. As I made toward him I saw he had been playing a $1.00 slot and he hit for $1,800. Excited, but unsure what was happening (my cousin has limited English), he was given a pen to sign a paper by the casino hosts and he did not hesitate. My cousin was then asked for an ID and he produced his Mexican ID. We finally did get a payout of only $1,260. Harrah's took the remaining $540 as federal income tax. My cousin was then asked to sign an additional form before getting any money.

Is this legal? I always thought it was the winner's responsibility to pay income taxes on winnings. Moreover, the form he signed was outdated (it was from 1995, but that date was scratched out and 1997 was written in). And finally, if this is normal procedure, why are there no current forms and why were the casino hosts so unsure as to how to proceed with a foreign winner?"

For an answer to your question, I spoke with Caroline Qualls, public relations manager for Harrah's Joliet Casino. Here's what she had to say:

"Our casino representatives handled everything appropriately. We are required by IRS regulations to ask for the ID of anybody who hits a slot machine jackpot for $1,200 or more. No ID and forms are required for jackpots of $1,199 and less. If we discover the person is a citizen of a foreign country, we are bound by IRS rules to withhold taxes from the winning amount based on the particular country's tax rate. In the case of Mexico, the rate is 30 percent. As for the form being outdated, there is no liability whatever to the person signing the form. The IRS supplies us with the forms and we must use whatever forms we have on hand. In this case the form was from 1995, but all the regulations for 1997 apply."

Even though United States citizens who win taxable jackpots do not have anything withheld on the spot, they are still required by IRS regulations to report the winnings with their income tax returns.

As for the hesitancy of the Harrah's Casino slot representatives in dealing with your cousin, I imagine such instances are rare and it just took them a little longer to handle the matter properly and according to regulations. For example, they must have had to refer to a guide to get the tax rate of withholding for Mexico.

This inquiry brings up the question of how big winners at the table games are addressed. It isn't unusual to see blackjack or craps high rollers walk away from the tables with more than $1,200, yet I've never seen them fill out forms after they bring their chips to the cashier's cage. We'll do an inquiry and report our findings in a future column.