Legislation to reduce withholding, reporting of Mississippi gaming winnings before Senate

Saturday, Feb. 17, 2001 | 9:40 a.m.

In return, taxpayers would not have to declare the winnings as income at tax time, said Deputy State Tax Commissioner Lester Herrington.

Presently, the state requires a 5 percent state tax to be withheld on jackpots of $1,200 or more. Usually this involves hand-paid jackpots on slot machines, in which the players is given a withholding statement.

The bill, approved this week by the Senate Finance Committee, would reduce the withholding to 3 percent and not require the player to declare the winnings as income for state tax purposes.

Casinos currently report the winnings to the Internal Revenue Service and gamblers would still be expected to pay what ever is due come tax time.

Herrington said the present procedure was a paperwork nightmare for the Tax Commission. He said the commission had found that it was processing 100,000 tax forms a year from out-of-state residents who got a refund of a portion of taxes withheld by the casino.

"In those returns, they were getting something like 2 percent back. We proposed taking 3 percent on the front end and that would be the end of it. You don't report the winnings as income and you don't deduct the losses (on state tax returns)," Herrington said.

Herrington said there is no gain or loss of revenue to the state because of the change.

Andy Bourland, executive director of the Mississippi Gaming Association, said the change would have minimal impact on the casinos.

"The significance of the bill, in our discussions with the Tax Commission, is providing them relief from administration of the out-of-state tax returns," Bourland said.

The bill is Senate Bill 3150.