Join 3,512 readers in helping fund MetaFilter (Hide)


Oh yeaaaah, it's the taxman
January 25, 2010 10:33 PM   Subscribe

A character in my story needs to hide gambling winnings from the IRS - what are some simple, non-James-Bondian ways he can hide his winnings?

The figure I have for him now is 25K. Outside of using offshore accounts, fake store-fronts, and elaborate schemes, what are some simple, clever ways he can hide his winnings? Also, if it matters, he is an older man in his 70s; he is not knowledgable about computers.
posted by anonymous to Work & Money (29 answers total) 8 users marked this as a favorite
 
Good 'ole fashioned lying?
posted by iamkimiam at 10:39 PM on January 25, 2010 [1 favorite]


Is he winning in public (i.e. casinos, racetracks, OTB places) or in more private venues (i.e. bookies, poker games with friends, etc.)?
posted by amyms at 10:39 PM on January 25, 2010


I'd go with cash. Easy to hide, easier to spend! 25K probably isn't enough to attract the IRS-- the old-fashioned hiding places are best here, and if he's that old, he'll think of the mattress first (hiding under the mattress, I mean).
posted by pippin at 10:41 PM on January 25, 2010


fake business that loses $25,000
posted by bluejayk at 10:45 PM on January 25, 2010


I think you're going to have two very different roads to take. One involves scenarios where he's winning at "legit" gambling where he's going to get something like a 1099 and it's going to be reported to the IRS. The other is going to be stuff that's more under the table, where he's simply going to try to hide the money or stick it in his bank account and not worry about it. Assuming he doesn't put 10K or more in, the IRS probably wouldn't find out about that, and would only show up if they audited him for some other reason.
posted by floam at 10:47 PM on January 25, 2010


He might buy junk silver with it. It's not that unusual, really—my father-in-law is kinda into it—and seems like a simple old-guy way to keep his money out of banks and in assets which will hold value. And hordes of coins and whatnot lend themselves to colorful vignettes, I should think.
posted by mumkin at 10:51 PM on January 25, 2010


(By $10K, I mean a $10K deposit into one bank, not the total amount. Splitting it up into a couple 5K transactions isn't good enough, they'll sniff something funny and send a form 8300 anyways. The winning strategy is probably over the course of a few years, getting several bank accounts going. This is especially easier now in the time of the internet, with lots of people signing up for savings accounts at more than one bank all the time to chase good interest rates.
posted by floam at 10:52 PM on January 25, 2010


25k is not a such large amount of money that your character couldn't just stash/spend as cash. He spreads it out among mattress, fake cleaning supply jar, tool box in garage etc.
posted by special-k at 10:53 PM on January 25, 2010


I read something about money laundering via "losing" at online gambling.

The person with the money plays online poker or whatever against someone in another country and "loses" repeatedly. The money is thus officially gone as far as the IRS is concerned. The person to whom it was lost later returns it in cash, or some other untraceable means.

I think that is how it works, from memory.
posted by drjimmy11 at 11:17 PM on January 25, 2010


I think that most legitimate casinos are bound to report to the IRS any winnings over $1200 or $1500.

To get around this, if his winnings are in poker chips, he can redeem $1100 each week for a while, then hold as cash/spend it slowly, etc. People leave casinos with significant sums in chip form all the time.
posted by yesster at 11:20 PM on January 25, 2010


Safe-deposit box at a bank, like a mobster
posted by autoclavicle at 11:21 PM on January 25, 2010


I think that most legitimate casinos are bound to report to the IRS any winnings over $1200 or $1500.

At the card room I sometimes play at, I was told the amount was $2,500. And that wasn't the amount won, but the amount that was cashed out. The idea being that launderers wouldn't have any winnings, but would buy (say) $5,000 worth of chips, then cash out for $4,900.
posted by UrineSoakedRube at 11:25 PM on January 25, 2010


actually the non-reporting limit has been raised from $10k to $12k.

So here's the question? Is this money in the banking system now? Like online gambling winnings? or did he win this money in person from underground casinos? It would probably make the story to have the guy win it play poker underground or something. If he's playing poker online these days, he'll probably have to have done some shady stuff to get the money loaded in in the first place.
posted by delmoi at 11:51 PM on January 25, 2010


The main thing you could do would simply be for him to deduct an equal amount in losses on his income tax. Yes, you can deduct gambling losses as long as they don't exceed winnings. This would be hard to prove if you won $50 million, but $25K? It happens all the time.
posted by Dee Xtrovert at 11:55 PM on January 25, 2010


How did he win it?

If he won it on a machine, they're going to give him a 1099 form right away and send a copy to the IRS. But if he won it through a game that uses chips, he could just cash the chips out in smaller amounts under the limit that would trigger the issuance of the 1099 form. Then it's just a matter of keeping the money in cash, and not spending it in obvious flashy ways that could not be explained. It would keep him in hookers and blow (or, more mundanely, cocktails, restaurant meals out, and other little luxuries that don't leave a trace) for a while.

He could stuff it in his mattress, or keep it in a safe-deposit box in a bank, or even get a box at the casino (casinos and poker rooms have a limited number of safe-deposit boxes available to regular high rollers).
posted by Jacqueline at 12:51 AM on January 26, 2010


According to this article, "Poker players can claim residence in countries such as Ireland(which is done by many European players) or even real tax havens, or they can work under poker "sponsorship agreements" with foreign companies."
posted by Mike1024 at 12:54 AM on January 26, 2010


Could he use a hawala system and send it abroad?
posted by MuffinMan at 1:33 AM on January 26, 2010


I think the easiest way with a relatively modest sum like that would simply be use it as spending money over the course of a year or two. For an older man like that, he could simply say he'd tucked away $100 a month cash for the last 20 years of his working life in a can in the backyard, and now it was time to spend it.

It's extremely doubtful unless he's under suspicion for other tax problems anyone would even notice.

(I wonder what the IRS would say if someone who had genuinely done that showed up at the bank to deposit their 20 years of savings. The tax had already been paid on the money, but how would the depositor ever prove it? Could your character simply deposit it with a story like that and escape with nothing but a raised eyebrow?)
posted by maxwelton at 2:00 AM on January 26, 2010


Buy art? Apparently that's what money launderers are into these days.
posted by stuck on an island at 2:52 AM on January 26, 2010


A character in your story, Mr Anonymous? $25,000 isn't exactly impressive as a plot device, unless you're going for a sort of Dr. Evil-style parody. Wouldn't a couple of million make a better, um, fictional example?

As others have said, if it was won at a casino it's already been reported to the IRS. To hide $25,000 of ill-gotten cash, though... well, why hide it at all? That's spendable money. Just don't buy some stupid obvious thing (like a car). Spend it in small, sub-$1000 chunks when buying the things you would usually buy, and of course don't put it into your bank account.

I mean your character's bank account.
posted by rokusan at 3:08 AM on January 26, 2010 [5 favorites]


First of all...any dude leaving a casino with $25K will have forms to fill...unless he's the kind that has been grinding day and night for weeks at the low-limit card tables or slots. THAT is kinda james bondian work...except that its hard work...and unsexy.

Casinos will NEVER let their clients skip the IRS forms if they can help it. Helping the client do that will yield them a little more income from gambling...but a HELL of a lot more trouble from the IRS. They will NOT do that. You win $100K from one pull...they are gonna wine and dine you while they take your ID, SS#, and look up any outstanding warrants out for you.

He plays the slots or blackjack. Every time he wins, he pockets that money...and as long as its less than $650 or whatever the limit is on cardgames, the casino doesn't have to report those winnings. But when he loses, he makes sure that someone can document him losing money.

In that way, its pretty damn easy to lose $25K playing with only $10K...and still going home with the $5k...for a total of $20K pocket-able cash.

But lets assume you mean he won $25K on one pull of a slot, and they just handed him the money and didn't ask for jack from him. HIGHLY unlikely...but lets assume.

What it comes down to hiding money...the real question is how much legitimate money does he want to show?

Is the answer "Zero"? Thats highly unlikely...even organized groups selling babies, livers, sex, crack and tactical gear don't do that. But lets do it since this is fiction.

For an old dude that I'm assuming has very few resources (social and otherwise), he will want to do small-time laundering. Cleaning the money so it looks legitimate...which makes it spendable.

Does he have a house? Put $25K into repairing the house. Pay the contractors in cash and get an even bigger discount, and they don't have to tell anybody. Sell the house for a LOT more.

Totally unsexy...but andy dufresne did have to crawl through 400 yards of shit to get to Mexico.

Hope that makes sense...
posted by hal_c_on at 3:28 AM on January 26, 2010


I have a friend *ahem* who wone $20K in Vegas and brought it home in cash, to minimize their tax liability. I'm not sure if they had to fill out forms when they cashed out.
posted by donajo at 4:47 AM on January 26, 2010


as several people have intimated here, you don't need to fill out a form or show ID or anything to cash out an amount less than $10 000. And you don't cash out at the table if you're playing chip games. You walk your winnings over to a cashier. If you win $25k, you could pretty easily just cash out $8k or so and leave with the rest of the chips in your pocket. Come back two other days and do the same thing.

If you win much more than that, you can bet they'll have somebody watching you as you leave the table, but you can just walk out of the casino. If anybody stopped you and gently reminded you to cash out, you would just say you planned to come back and play more the next day. Make sure you call for a driver though, the casino employees won't be the only ones watching you.

Then you can come back and cash it out in whatever chunks you want over the next days or weeks. Or have somebody else do it, for that matter.
posted by 256 at 5:33 AM on January 26, 2010


Hm, I'll tell you how real life online gamblers do it.

They open an account at Neteller or Moneybookers and send a "bankroll" to it. They transfer bankroll to pokersite, win money, cash it out to Neteller or Moneybookers. Neteller (registered on Isle of Man) provides Mastercards for free, directly linked to your online account. For all intents and purposes, you thus have an offshore Isle of Man account. You use the card like any other Mastercard at shops, real life casinos, and even ATMs.

The only thing that happens as far as the IRS is concerned is that the "bankroll" leaves the account, but you can justify that by saying you gambled it all away on the online roulette (you wouldn't be the only one). Your winnings just never enter the American money system, only in the form of cash withdrawals or shop purchases. It would be very very hard for the IRS to detect that money stream, especially if it's "only" 25k. For instance, many successful poker players have bankrolls in the millions, and I've never heard one of them getting caught by the IRS (let's hope they're not reading this, eh).

I'm sure that once you hit something like 200k online, it makes sense to open an numbered account in Switzerland or the Cayman Islands. You can then send your Neteller money to your numbered account in Switzerland: cool! Shouldn't be too hard. Actually, I've always been kind of curious to know how hard that is. Anyone know?
posted by NekulturnY at 6:21 AM on January 26, 2010 [1 favorite]


Seeing as it is fiction, wouldn't it be possible to have a friend at the cashier's window of the casino who takes either a straight kickback or some sort of other favor in trade and doesn't report winnings? Might need to be smaller amounts paid out over time when certain friend is on duty.

I'm sure non-fictional casinos screen for this sort of thing. Further plot point in favor/kick back/exchange with casino employee.
posted by countrymod at 6:30 AM on January 26, 2010


Have your character win it in a poker game off the grid and have to fight a few thugs in the back alley? I'm sure a casino will notice anyone taking 25K of their money/chips off the table. And I'm sure they will notice the same person coming in every other day cashing out a few 1000 at a time. (Not very bondish.) They got state of the art security in those places. I agree with countrymod. Having a person on the inside is really the only way to bypass their security. But that is more Oceans 11 than Bond. Bond would just show a fake ID, sleep with the teller, or spend the whole amount at the casino in a tux and fine dining binge.
posted by Mastercheddaar at 6:55 AM on January 26, 2010


Lots of speculation around here about what causes a casino to report your winnings. Much of it is incorrect.

Fortunately, the IRS has very clear rules on this, laid out in the instructions of the W2-G and 5754 forms here.

If you win big at a Nevada casino, they will not give you a 1099. They will give you a W2-G, and they will withhold 25%-28% of your winnings as federal tax (and send that to the IRS). So, what's "Winning big"? If your winnings are in cash (and not the Camaro that's above the slot machines), the IRS defines it quite clearly as: Neither the IRS nor the state of Nevada requires a W2-G, reporting, or any withholding on winnings at a table game (excluding poker tournaments). Read that again.

If you walk into a casino, put $500 on the craps table, and walk away with $5000, the casino is not required to give you a W2-G or report your winnings when you cash those chips out. This is because there is not a written record of how much money you started with (the gaming lobby convinced Congress that they can't be expected to know whether your $5,000 started as $500 or $50,000). Because the casino is not required to report these winnings, and the casino customer would generally prefer they go unreported, most casinos will turn a blind eye. (This doesn't exempt you from listing your winnings on your taxes, it just means that it's not the casino's job to inform the IRS of those winnings)

However, (and you knew there was a however). The casinos are required to report any cash transaction(s) that total above $10,000 in a one-day period on FinCEN form 103, and may report any cash transaction above $5,000 on form 102, if they think you're doing something fishy. In practice, multi-thousand dollar cash transactions happen in casinos every hour of every day, and (as of 2008) only 452,000 forms were filed nationwide... getting $25,000 in chips converted to $25,000 in unreported cash will take a few days (and if you had an accomplice, you could do it faster), but it's far from difficult.

$25,000 in $100 bills is 250 bills, or a 1.07" stack. My fictional character woul split it into two half-inch piles, put each in an unmarked safety envelope, and keep one in a safe somewhere at home, and the other in a safe-deposit box at a bank somewhere. He'd use the nearby money for pretty much any transaction that he could (groceries, car repair, unstirred martinis, rent?), and replenish the pile periodically by visiting the safe-deposit box.
posted by toxic at 10:21 AM on January 26, 2010 [3 favorites]


Nevada & formerly Wisconson don't report income or earnings to the IRS.

Which, I suspect, is why Microsoft incorporated in Nevada.
posted by MesoFilter at 9:14 PM on January 26, 2010


*My* fictional character would...
-put five grand in a safe deposit box
-put half of a pound of gold & 5 pounds of silver under the back yard
-fill the garage with premium toilet paper and other necessary consumables that have the shelf-life of gravel
-go legit and start a small business
posted by codswallop at 9:31 PM on January 26, 2010


« Older Orchid Filter - we bought plug...   |  Hello, I'm just about to buy ... Newer »
This thread is closed to new comments.