A Casino reported winnings to IRS that we did not receive. Now the IRS wants us to pay taxes. What should we do?

It depends upon what you mean by "winnings you did not receive." Did you have any winnings that you did not keep your winning slips on? Did you lose any winnings slips? Did any of the slips show a withholding tax amount? Did you record your winnings in a second place, such as a diary or a calendar? Did your tax preparer add the slips correctly?

It's going to be very hard to prove that your records are absolutely, 100% complete and correct and the casino's information is faulty. Depending upon how much is at stake, you may want to take the issue to Tax Court to see if you cannot get a settlement somewhere between what you think you owe and what the IRS says you owe. But, remember, interest and penalties (if any) continue to accrue day-by-day; so you may just have to make a dollars and cents decision about how much this issue is worth to you.

Sorry, but there is no easy answer, here. Good luck.

Disclaimer: Please note that this answer does not constitute legal advice, and should not be relied on, since each state has different laws, each situation is fact specific, and it is impossible to evaluate a legal problem without a comprehensive consultation and review of all the facts and documents at issue. This answer does not create an attorney-client relationship. Do NOT rely on anything I have written here -- You should contact a lawyer in your area immediately after reading my posting.

The following disclosure is required pursuant to IRS Circular 230: unless otherwise expressly indicated, any federal tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

See the article at http://www.casinogaming.com/features/taxlaws.html. This may show you why you and the Casion are calculating winnings differently. If you still feel the Casino is reporting the wrong numbers ask them to document their figures. Beyongd that you may need to hire an attorney to review your options with the IRS and the Casino.

Very truly yours,

Ed Smeltzer

NOTE: This answer was prepared for educational purposes only. By using this site you understand and agree that there is no attorney client relationship or confidentiality between you and the attorney responding. This site should not be used as a substitute for competent legal advice from a licensed attorney that practices in the subject area in your jurisdiction and with whom you have an attorney client relationship. The law changes frequently and varies from jurisdiction to jurisdiction. The information and materials provided are general in nature, and may not apply to a specific factual or legal circumstance described in the question or omitted from the question.