Out-of-state gamblers' deductions at issue

JACKSON, Miss. -- Mississippi's tax collection agency is taking a closer look at refund requests filed by out-of-state residents who win money at Magnolia State casinos.

Ed Buelow, chairman of the State Tax Commission, says most of the approximately 100,000 nonresidents who file taxes on casino winnings each year claim 100 percent losses, asking the state to return withholdings.

In the past, the agency has not closely investigated claimed losses, he said.

As the number of out-of-state gamblers has increased, Buelow said tax officials have realized the state is losing money unnecessarily.

This year, officials will strictly enforce laws requiring filers to document their losses.

In addition, gamblers asking for refunds must prove what percentage of total income was won in Mississippi casinos.

"Some are saying all their income was earned in Mississippi," when that's not true, Buelow said. "We think we're losing too much revenue from it."

Mississippi requires a 5 percent state tax withheld on jackpots, usually slot machines, of $1,200 or more. The state returns at least 2 percent of withholdings to many gamblers, Buelow said.

A bill pending in the Legislature would instead require casinos to withhold 3 percent of patrons' winnings up front, and gamblers would neither report winnings nor deduct losses on state tax returns. They would still have to track winnings for federal income tax purposes, Tax Commission officials say.

Buelow said the law would eliminate an administrative nightmare for tax officials and probably save the state money.

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