Park: per-session gambling income for non-resident aliens: Status, Rulings and What It Means for Players

What this case is about

Park v. Commissioner of Internal Revenue (docket 12-1058, consolidated with 12-1059, U.S. Court of Appeals for the D.C. Circuit) asked how a non-resident alien's slot winnings are taxed.

It is one of the Gambling Tax Litigation cases and came to the appeals court from the Tax Court, which had ruled against the visitors (136 T.C. 569). The appeal was argued on 11 April 2013.

Sang J. Park and Won Kyung O, South Korean visitors, challenged the Commissioner of Internal Revenue. The question was whether section 871 taxes slot winnings bet by bet, with 30 percent withholding on each winning pull, or per gambling session.

Who is covered

The ruling concerns non-resident aliens who gamble in the United States. They may measure slot gains and losses per session, as US citizens do.

The case was filed in 2011 and argued on 11 April 2013. For other cases in the same jurisdiction, see Gambling Lawsuits in District Of Columbia.

Is there a payout?

No payout exists in this case. It is a tax ruling on how winnings are measured, and the record shows no class, no settlement fund and no claim process.

Filing a settlement claim is free wherever a claim exists, but none exists here. GamblingLawsuits.org is not a law firm and not a claims administrator.

What the court decided

On 9 July 2013 Judge Kavanaugh wrote the opinion (722 F.3d 384), joined by Judges Tatel and Sentelle, and reversed the Tax Court (136 T.C. 569). The court held that non-resident aliens may measure slot gains and losses per session rather than paying 30 percent withholding on every winning pull.

Measuring per session means that gains and losses within one gambling session are netted, as they are for US citizens, instead of each winning pull being taxed on its own. The IRS later adopted the session approach in regulations and proposed safe harbours.

Why it matters

The decision aligned the treatment of non-resident aliens with that of US citizens for slot play. It is a precedent for how gambling gains are measured, and it affects how much tax a visiting player owes on net session results.

Tax treatment of settlement money is a separate question, covered in Are Gambling Settlement Payments Taxable.

Questions people ask

Does Park v. Commissioner apply to US citizens?

The ruling is about non-resident aliens. It held that they may measure slot gains and losses per session, as US citizens do.

Did the IRS accept the ruling?

The IRS later adopted the session approach in regulations and proposed safe harbours. The decision was issued on 9 July 2013 by the D.C. Circuit.