Paul L. Caron
Dean




Monday, April 6, 2015

Scamming the IRS With Losing Lottery Tickets

IRSThe Daily Beast, Scamming the IRS With Losing Lotto Tix:

Here’s one way to dodge the taxman—buy thousands of losing lottery tickets.

It’s true. Gamblers have concocted a scheme to repurpose the dud ducats to offset their winnings. A winner can go online and get $5,000 worth of losing lottery tickets to cover their $5,000 in gambling winnings. The lottery tickets serve as a sort of security blanket if the auditor comes calling.

Ads captured on Craigslist and eBay from Florida to California hawk the tickets so the potential lotto buyer can defraud Uncle Sam. ...

“There is a gray market out there for these lottery tickets,” said Reece Morrel Jr., an Oklahoma-based CPA who files taxes for some high rollers and oversees the online Lady Luck Diary website, where gamblers can get schooled on tax laws.

But hoarding stacks of scratchers or Powerball game tickets to prove that you suffered losses could very well land you in trouble with the IRS. ...

[T]he IRS isn’t likely to make a fuss about lottery tickets, said Nelson Rose, a professor at Whittier Law School and author of several gambling books. “If the IRS or the FBI really cared, they could go after [all] the people buying and using them to evade taxes by saying they’re losses.” ...

The Daily Beast asked the IRS to inform it about the lottery ticket loophole. As requested, this reporter promptly submitted a set of questions to the tax agency. In response, the IRS sent back bone-dry links to its website that barely touch on how to report gambling losses.

https://taxprof.typepad.com/taxprof_blog/2015/04/scamming-the-irs-.html

IRS News, Tax | Permalink

Comments

It's not that different from companies harvesting tax losses of other companies, a legal practice. This is just a retail version of that wholesale tactic.

Posted by: AMT buff | Apr 7, 2015 8:35:39 AM

Silly you. They're not scamming the IRS. They're scamming you! Who do you think pays the "extra" taxes that are scammed from federal revenues? Duh.

Posted by: Publius Novus | Apr 7, 2015 7:36:03 AM

You gotta love the human condition. No matter how hard the regulators try to regulate us, we always find a way to beat the man.

Posted by: Dale Spradling | Apr 7, 2015 7:06:54 AM