Neteller and the IRS

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At the risk of beating a dead horse, I just wanted to share a little of my morning paranoia. So I know that despite my protestations, a number of online poker players still don’t plan to report their play on their taxes. I frankly think that it’s an enormous risk to take, and I fully expect to see some online poker players sent to prison in the next few years over it.

I really don’t want that to happen. One of the problems with the Feds going after Neteller execs and other payment processors is that they can offer deals to the execs if they open up their financial records to Uncle Sam. Maybe the Neteller execs are willing to go to the felt for gambler’s privacy (I don’t know), but I wouldn’t bet that every person arrested over this will be so high-minded. If the Feds say, “We’ll cut you a nice deal if you show us your books,” I bet they’ll get some takers.

At that point, they can look through the books for high volume players, cross-reference their tax returns, and go after people with gaping discrepancies. The government has said it wouldn’t go after individual gamblers, but I think that’s only because they know they couldn’t make anything stick on gambling charges alone. One of the government’s tried and true methods for going after people they otherwise couldn’t get is by playing the tax evasion card. I really think there’s a good chance it’s coming, and I’d expect to see it come down hard and all at once rather than little by little.

If you play poker online and don’t report your income on your 1040… I really think there’s a decent chance you’ll end up with major problems sometime in the next few years. If you haven’t reported your income and you want to come clean, hire a tax lawyer and don’t say a word about it on any public forums. Please.

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