The IRS has always pursued individuals for under reporting of income; especially gambling income. Its important that you report your gambling winnings and losses, even if you lost more than you had won. See Publication 525, Taxable and Nontaxable Income, for rules on gambling and Publication 529, Miscellaneous Deductions, for more information on losses. Publication 529 also lists specific types of gambling records a taxpayer may want to keep. Download and view IRS publications on IRS.gov/forms at any time.
Larry Tillery of Beaumont, Texas was sentenced to 33 months in prison for tax evasion and for running a business that accepted illegal wagers on sporting events from 1985 to 2017. Tillery owned Daylight Motors, a used car dealership, and Lamar Capital, and used both companies as a front to launder the illegal gambling proceeds. He was ordered to pay restitution of $1,000,040 and to forfeit approximately two million dollars in cash, jewelry and sports memorabilia. A judgment of $32,758,541 was also ordered by the court.
Tillery’s wife, Judy, was sentenced to 24 months’ probation and shares the judgment with her husband. She assisted with laundering the proceeds of the operation, which allowed bettors to place bets on sporting events, including professional and collegiate basketball, baseball and football games via a website.
Brian Tillery, Larry’s son, was sentenced to 24 months’ probation and was ordered to forfeit $245,477 and a home worth $600,000. He collected money from bettors, paid bettors, made wire transfers to pay illegal gambling debts. He also regularly mailed currency totaling more than $10,000 through the US Post Office.
While the gambling operation was illegal, federal tax law still required that Tillery register with the IRS as a bookmaker, report total wages he accepted monthly, and pay a gross wagering excise tax of 2% every month. Between 2011 and 2016 alone, Tillery accepted at least 52 million dollars in illegal wagers, resulting in over a million dollars in wagering taxes he did not pay.
Reference: Helpful Tips to Know About Gambling Winnings and Losses
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