1:01:03
Ohio Sports Gaming Receipts and Withholding Webinar 12 8 22
OhioDeptOfTaxation
Overview
This webinar provides a comprehensive overview of Ohio's sports gaming tax regulations, focusing on both the receipts tax and withholding requirements. It details the implementation of House Bill 29, effective January 1, 2023, and outlines the roles of the Ohio Department of Taxation, the Ohio Casino Control Commission, and the Lottery Commission. The session covers registration processes, taxpayer definitions, filing procedures through the Ohio Business Gateway, and specific tax calculations for receipts and winnings. It also addresses common questions and scenarios encountered by proprietors and service providers.
How was this?
Save this permanently with flashcards, quizzes, and AI chat
Chapters
- House Bill 29 established a tax on sports gaming in Ohio, effective January 1, 2023.
- The Ohio Casino Control Commission is responsible for licensing sports gaming operators.
- The Department of Taxation administers the sports gaming receipts tax for Type A (online) and Type B (brick-and-mortar) proprietors.
- Type C proprietors (Lottery Commission) are not subject to the sports gaming receipts tax.
- Continuing education credits are not offered for this webinar.
Understanding the legislative basis and responsible agencies is crucial for compliance with new sports gaming tax laws.
House Bill 29 was passed in December, setting the stage for sports gaming operations to begin on January 1, 2023.
- The sports gaming proprietor is generally the taxpayer responsible for the receipts tax.
- An exception exists for professional sports organizations whose league bylaws prevent them from operating a sportsbook; they can designate a service provider as the taxpayer.
- Proprietors will receive registration letters from the Department of Taxation with account numbers and filing frequencies.
- Professional sports organizations must submit a registration form to designate their service provider as the taxpayer.
- Account start dates should align with the actual commencement of operations, not just the license effective date.
Correctly identifying the taxpayer and completing the registration process ensures accurate tax assessment and avoids penalties for incorrect filing dates.
If a professional sports organization cannot operate a sportsbook due to league rules, they can designate their management service provider to handle the tax filings and payments.
- The Ohio Business Gateway (gateway.ohio.gov) is the platform for registration, filing, and payments.
- Users must create an account by providing email, personal information, a username, and a password meeting specific criteria.
- Filing administrators within the proprietor organization set up the account, add service areas (like Sports Gaming Receipts Tax), and define transaction types (Type A, Type B).
- Permissions for filing, editing, creating, or deleting transactions can be granted to specific users.
- Service providers can be granted access to file and pay on behalf of proprietors through a request and approval process.
Mastering the Ohio Business Gateway is essential for navigating the administrative tasks required for sports gaming tax compliance.
A filing administrator adds the 'Sports Gaming Receipt Tax' service area and then selects 'Type A' and 'Type B' transaction types to make them available on their dashboard.
- Sports gaming receipts include all gross receipts, including promotional gaming credits.
- Deductible items include cash paid as winnings, voided wagers, and, starting January 1, 2027, promotional gaming credits (initially 10%, increasing to 20% by 2032).
- Returns are filed monthly through the Ohio Business Gateway by the 15th of the following month.
- Type A and Type B proprietors file separate returns for each license type.
- If a month's tax liability is negative, it means the tax due is zero; negative amounts cannot be carried forward.
Accurate calculation of receipts, understanding deductible items, and timely monthly filings are critical for meeting the sports gaming receipts tax obligations.
Promotional gaming credits are included in gross receipts but can only be deducted starting in 2027, with specific percentage limitations.
- The process involves selecting the correct return (Type A or Type B) on the Gateway.
- Users input filing information, including account number, reporting period, and filing type.
- The return requires entering total wagers, winnings, voided wagers, and promotional credits.
- After review, the return is filed, and a confirmation with a filing number is provided.
- Payments are made via ACH debit, with options to pay immediately or defer to the due date.
Following the step-by-step process on the Gateway ensures that returns are filed correctly and payments are processed accurately.
After entering all wager and receipt data, the user reviews the summary, acknowledges the perjury statement, and clicks 'File' to submit the return.
- Withholding is required if winnings are reportable to the IRS under IRC Section 6041.
- This means withholding 4% on winnings of $600 or more AND 300 times the wager.
- A separate Ohio withholding account number is required for sports gaming winnings, distinct from employee withholding accounts.
- Proprietors can designate a Management Service Provider (MSP) or Mobile Management Service Provider (MMSP) to act as the taxpayer for withholding purposes.
- Type C proprietors are the designated taxpayers for withholding.
Understanding the specific thresholds and the requirement for a separate withholding account is essential to comply with Ohio's sports gaming withholding tax laws.
A player wins $700 on a $2 wager (which is 350 times the wager); since both the $600 threshold and the 300x wager threshold are met, 4% withholding is required.
- Monthly returns (IT 501) are due by the 10th of the following month.
- Annual reconciliation (IT 941) is due January 31st of the following year.
- W2G winner reports are required monthly (due the 10th) and annually (due January 31st).
- The Ohio Business Gateway is used for filing IT 501 and IT 941 returns and uploading W2G reports.
- Specific file layout specifications for W2G reports are available on the Department of Taxation website.
Adhering to the monthly and annual filing deadlines for withholding returns and winner reports ensures compliance and avoids penalties.
The IT 501, filed monthly, reconciles the 4% withholding on winnings, while the IT 941 reconciles all IT 501s filed throughout the year.
- The Ohio Department of Taxation website (tax.ohio.gov) offers a sports gaming webpage with FAQs, webinars, and tutorials.
- Gateway tutorials and job aids are available for specific processes like filing returns and granting permissions.
- Information on the Commercial Activity Tax (CAT) is also available for those potentially subject to it.
- Contact information (email and phone) is provided for further questions.
- A separate webinar on offset information for sports gaming winnings was scheduled with other state agencies.
Utilizing available resources and seeking clarification is key to navigating complex tax regulations and ensuring accurate compliance.
The tax.ohio.gov website hosts FAQs and tutorials that break down complex processes like granting filing permissions on the Gateway.
Key takeaways
- Ohio's sports gaming tax framework includes both a receipts tax and a withholding tax, effective January 1, 2023.
- The Ohio Business Gateway is the central platform for all registration, filing, and payment activities related to sports gaming taxes.
- Proprietors are generally responsible for the receipts tax, but can designate service providers to file on their behalf.
- Withholding tax applies to winnings meeting specific federal reporting thresholds ($600+ AND 300x wager), requiring a separate account from employee withholding.
- Accurate record-keeping and timely monthly filings for both receipts tax and withholding are crucial for compliance.
- Understanding the distinction between Type A, Type B, and Type C proprietors is essential for determining tax obligations.
- Promotional gaming credits are included in receipts but have a delayed deductibility period starting in 2027.
- Service providers granted access to a proprietor's Gateway account can view filing and payment history.
Key terms
Sports Gaming Receipts TaxSports Gaming Withholding TaxOhio Business GatewayProprietorService ProviderType A LicenseType B LicenseType C LicenseManagement Service Provider (MSP)Mobile Management Service Provider (MMSP)Promotional Gaming CreditsWinningsACH Debit/CreditW2G Winner ReportIT 501IT 941
Test your understanding
- What is the primary difference in tax liability between Type A/B proprietors and Type C proprietors in Ohio?
- How does a professional sports organization designate a service provider to act as the taxpayer for sports gaming receipts tax?
- What are the two conditions that must both be met for sports gaming winnings to be subject to Ohio's 4% withholding tax?
- Why is it important for proprietors to use a separate withholding account for sports gaming winnings compared to their employee withholding accounts?
- What are the due dates for the monthly IT 501 return and the annual IT 941 reconciliation for sports gaming withholding?