Tuesday, February 13, 2007

It Appears That I Am In a Special Class of Neteller Customers

No you do not want to be part of this class. I don't think anyone has brought this quite up yet so I will. When they say the US Government seized 55 Million in Neteller funds, this is from a very specific class of customers. Total US deposits at the time must be at least 10x that, and are probably way north of a billion dollars. The government can't just go out an seize the money Neteller holds. They are a foreign quasi-bank right? What they can and did seize is money in transit in the financial systems. For the 2-3 days the electronic fund transfer data takes to get through the interweb, the funds are out of Neteller's control. These are the funds that were seized. My funds were seized. I had a withdrawal for my last 3k pending prior to Neteller's announcement, and it still is pending with the cancel transaction button missing.

For those of you not in my shoes who had funds in Neteller, but not in transit I actually think your funds are safe. Neteller is pretty big, and has been making tons of money as the market share leader. There is no reason to think the money is gone. It will hurt them bigtime in the short term as they adjust, but they are still generating $200k in fees/day after the US closures. What about my money? Is it safe? It's not my fault that the US decided to seize my funds. I would say Neteller owes the transfer amount to me should the US not return them, but I am probably on the short end of the stick here.

Then there are the tax implications. I am probably going to get heavily scrutinized as a result of this. Much more so than you others whose money was not seized. They are probably going to want me to pay taxes. So I have a simple strategy. Claim that I am not a winning gambler. 1st off, I have earned a ton of deposit bonuses. I am not sure if something like that is taxable. Deposit bonuses can't be considered gambling winnings can they? It is like the gramdma who clips coupons. She makes the perfect run on the store where everything ends up being free, plus she gets $20 back. That $20 is taxable income? A $20 deposit bonus is taxable income? FT releases in $20 increments as do many others, and it can add up to thousands of dollars in a year. I break even, but end up ahead on bonuses? And the little extra I may be ahead is easily blown on wild gatherings in Vegas where the -EV games magically offset your measly winning left after all of the deposit bonuses. Plus you should be able to deduct all of the travel expenses it took for you to go blow your winnings. I have never signed a tax doc for any kind of gambling winnings, and I am no pro. Anyone buy this line? Whats the over under on if I am going to have to use it?

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9 Comments:

At 10:18 AM, Blogger lumpy said...

Unfortunately deposit bonuses are taxable. That granny who gets $20 at the grocery store, taxable. Any form of income is taxable.

 
At 11:08 AM, Blogger Butch Howard said...

Not only that, but I bet that the IRS will consider the bonuses and rakeback as 'gambling winnnings' because your receipt of them depended on the gambling. So they will need to be treated as gambling winnings instead of normal income with all the negative tax implications that has.

 
At 1:15 PM, Blogger smokkee said...

luckily, i got all my money outta Neteller before they seized it. hopefully, they won't dig so deep they look into past customer's activity who didn't get any funds seized.

 
At 2:18 PM, Blogger bayne_s said...

I am not a tax professional but during my prior research into matter of deducting travel costs, I learned that you had to have declared income in the activity 3 of past 5 years (current year included).

Don't know if you have had Vegas trips activity recorded on Harrah's Total Rewards card or other casino comps tracking but Harrah's has been happy to provide me a Win/Loss statemnet in the past.

 
At 2:28 PM, Blogger Blinders said...

So a comp is taxable income. If the casino pays for your room, you claim the value of the room as income? I don't think that is true. Cash is different, but in small amounts like $20 I don't think you have to claim it. It is a "gift" that is smaller than what is required to be reported. They are giving you a gift for a specific reason, but don't all gifts have some motivation behind them?

On travel expenses, I would only use these to offset profits. So I don't think the 3 out of 5 year rule applies. I am not claiming them to lower my taxes just to offset some income that was related to the travel.

 
At 2:44 PM, Blogger SirFWALGMan said...

A comp is taxable, if you get caught. It is one of those things where nobody really pays them..

Bonus Whore Money is SO taxable.

Your just fucked if you have taken any money out.. now if you have left it all in your poker accounts your ok..

 
At 12:03 PM, Blogger NewinNov said...

If you read the IRS regulations and scan the internet, for any given year your losses can only be used to offset your gains. You cannot deduct travel, lodging, meals, etc unless you are a professional gambler. If you are a recreational gambler with other income (main job), you must declare your gambling winnings. I read that some countries, e.g. Canada I believe, don't consider gambling winnings taxable. I do know that when you win a sweepstakes gift you will need to pay taxes on the item. Now you don't always have to pay the suggested retail price if you can document you could have bought the identical item at a lower cost somewhere else. Same thing should go for certain poker comps of a non-monetary nature. Of course any bonuses, comps that are purely monetary, would need to be reported. There are actually some interesting court records on this matter and one guy wrote a book for poker gamblers and their taxes. Good luck.

 
At 12:40 PM, Blogger Hammer Player a.k.a Hoyazo said...

I'm pretty sure I read somewhere that Neteller turned over to the US Government records from literally thousands and thousands of U.S. customers, and I don't see where whether or not your funds were "seized" or "in transit" as of the shithittingthefannage had anything to do with that. Seriously. I think if the government wants to go after U.S. poker players for taxes, #1 I think they will spend a lot of time, resources and money to discover that the vast, vast majority of U.S. players have lost money every year, and thus owe no taxes, and #2 I think they already have the records to perform that investigation, with no regard to whether the funds were in transit when the whole seizure thing happened.

 
At 12:11 PM, Blogger HighOnPoker said...

I heard on a radio news program (don't remember which one) that the IRS has the lowest number of auditors it has had in a LONG while, due to budget cuts. At least the chance of an audit is significantly smaller.

 

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