CHAPTER 35 - TAXES ON WAGERING
Title 26 > CHAPTER 35
Sections (13)
§ 4401 Imposition of tax
(a) Wagers There shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager. There shall be imposed on any wager not described in paragraph (1) an excise tax equal to 2 percent of the amount of such wager.
(b) Amount of wager In determining the amount of any wager for the purposes of this subchapter, all charges incident to the placing of such wager shall be included; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary, that an amount equal to the tax imposed by this subchapter has been collected as a separate charge from the person placing such wager, the amount so collected shall be excluded.
(c) Persons liable for tax Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this subchapter on all wagers placed with him. Each person who conducts any wagering pool or lottery shall be liable for and shall pay the tax under this subchapter on all wagers placed in such pool or lottery. Any person required to register under section 4412 who receives wagers for or on behalf of another person without having registered under section 4412 the name and place of residence of such other person shall be liable for and shall pay the tax under this subchapter on all such wagers received by him.
§ 4402 Exemptions
No tax shall be imposed by this subchapter— On any wager placed with, or on any wager placed in a wagering pool conducted by, a parimutuel wagering enterprise licensed under State law, On any wager placed in a coin-operated device (as defined in section 4462 as in effect for years beginning before July 1, 1980 ), or on any amount paid, in lieu of inserting a coin, token, or similar object, to operate a device described in section 4462(a)(2) (as so in effect), or On any wager placed in a sweepstakes, wagering pool, or lottery which is conducted by an agency of a State acting under authority of State law, but only if such wager is placed with the State agency conducting such sweepstakes, wagering pool, or lottery, or with its authorized employees or agents. ( Aug. 16, 1954, ch. 736 , 68A Stat. 525 ; Pub. L. 85–859, title I, § 152(b) , Sept. 2, 1958 , 72 Stat. 1305 ; Pub. L. 89–44, title IV, § 405(a) , title VIII, § 813(a), June 21, 1965 , 79 Stat. 149 , 170; Pub. L. 94–455, title XII, § 1208(a) , Oct. 4, 1976 , 90 Stat. 1709 ; Pub. L. 95–600, title V, § 521(c)(1) , Nov. 6, 1978 , 92 Stat. 2884 .)
§ 4403 Record requirements
Each person liable for tax under this subchapter shall keep a daily record showing the gross amount of all wagers on which he is so liable, in addition to all other records required pursuant to section 6001(a). ( Aug. 16, 1954, ch. 736 , 68A Stat. 525 .)
§ 4404 Territorial extent
The tax imposed by this subchapter shall apply only to wagers accepted in the United States, or placed by a person who is in the United States with a person who is a citizen or resident of the United States, or in a wagering pool or lottery conducted by a person who is a citizen or resident of the United States. ( Aug. 16, 1954, ch. 736 , 68A Stat. 525 .)
§ 4405 Cross references
For penalties and other administrative provisions applicable to this subchapter, see sections 4421 to 4423, inclusive; and subtitle F. ( Aug. 16, 1954, ch. 736 , 68A Stat. 526 .)
§ 4411 Imposition of tax
(a) In general There shall be imposed a special tax of $500 per year to be paid by each person who is liable for the tax imposed under section 4401 or who is engaged in receiving wagers for or on behalf of any person so liable.
(b) Authorized persons Subsection (a) shall be applied by substituting “500” in the case of— any person whose liability for tax under section 4401 is determined only under paragraph (1) of section 4401(a), and any person who is engaged in receiving wagers only for or on behalf of persons described in paragraph (1).
§ 4412 Registration
(a) Requirement Each person required to pay a special tax under this subchapter shall register with the official in charge of the internal revenue district— his name and place of residence; if he is liable for tax under subchapter A, each place of business where the activity which makes him so liable is carried on, and the name and place of residence of each person who is engaged in receiving wagers for him or on his behalf; and if he is engaged in receiving wagers for or on behalf of any person liable for tax under subchapter A, the name and place of residence of each such person.
(b) Firm or company Where subsection (a) requires the name and place of residence of a firm or company to be registered, the names and places of residence of the several persons constituting the firm or company shall be registered.
(c) Supplemental information In accordance with regulations prescribed by the Secretary, the Secretary may require from time to time such supplemental information from any person required to register under this section as may be needful to the enforcement of this chapter.
§ 4413 Certain provisions made applicable
Sections 4901, 4902, 4904, 4905, and 4906 shall extend to and apply to the special tax imposed by this subchapter and to the persons upon whom it is imposed, and for that purpose any activity which makes a person liable for special tax under this subchapter shall be considered to be a business or occupation referred to in such sections. No other provision of sections 4901 to 4907, inclusive, shall so extend or apply. ( Aug. 16, 1954, ch. 736 , 68A Stat. 527 .)
§ 4414 Cross references
For penalties and other general and administrative provisions applicable to this subchapter, see sections 4421 to 4423, inclusive; and subtitle F. ( Aug. 16, 1954, ch. 736 , 68A Stat. 527 .)
§ 4421 Definitions
For purposes of this chapter— The term “wager” means— any wager with respect to a sports event or a contest placed with a person engaged in the business of accepting such wagers, any wager placed in a wagering pool with respect to a sports event or a contest, if such pool is conducted for profit, and any wager placed in a lottery conducted for profit. The term “lottery” includes the numbers game, policy, and similar types of wagering. The term does not include— any game of a type in which usually the wagers are placed, the winners are determined, and the distribution of prizes or other property is made, in the presence of all persons placing wagers in such game, and any drawing conducted by an organization exempt from tax under sections 501 and 521, if no part of the net proceeds derived from such drawing inures to the benefit of any private shareholder or individual. ( Aug. 16, 1954, ch. 736 , 68A Stat. 528 .)
§ 4422 Applicability of Federal and State laws
The payment of any tax imposed by this chapter with respect to any activity shall not exempt any person from any penalty provided by a law of the United States or of any State for engaging in the same activity, nor shall the payment of any such tax prohibit any State from placing a tax on the same activity for State or other purposes. ( Aug. 16, 1954, ch. 736 , 68A Stat. 528 .)
§ 4423 Inspection of books
Notwithstanding section 7605(b), the books of account of any person liable for tax under this chapter may be examined and inspected as frequently as may be needful to the enforcement of this chapter. ( Aug. 16, 1954, ch. 736 , 68A Stat. 528 .)
§ 4424 Disclosure of wagering tax information
(a) General rule Except as otherwise provided in this section, neither the Secretary nor any other officer or employee of the Treasury Department may divulge or make known in any manner whatever to any person— any original, copy, or abstract of any return, payment, or registration made pursuant to this chapter, any record required for making any such return, payment, or registration, which the Secretary is permitted by the taxpayer to examine or which is produced pursuant to section 7602, or any information come at by the exploitation of any such return, payment, registration, or record.
(b) Permissible disclosure A disclosure otherwise prohibited by subsection (a) may be made in connection with the administration or civil or criminal enforcement of any tax imposed by this title. However, any document or information so disclosed may not be— divulged or made known in any manner whatever by any officer or employee of the United States to any person except in connection with the administration or civil or criminal enforcement of this title, nor used, directly or indirectly, in any criminal prosecution for any offense occurring before the date of enactment of this section.
(c) Use of documents possessed by taxpayer Except in connection with the administration or civil or criminal enforcement of any tax imposed by this title— any stamp denoting payment of the special tax under this chapter, any original, copy, or abstract possessed by a taxpayer of any return, payment, or registration made by such taxpayer pursuant to this chapter, and any information come at by the exploitation of any such document, shall not be used against such taxpayer in any criminal proceeding.
(d) Inspection by committees of Congress Section 6103(f) shall apply with respect to any return, payment, or registration made pursuant to this chapter.