Failed to Report Your Gambling Winnings to the IRS? You Could Be At Risk of Facing a Criminal Tax Investigation

If you are among the more than 100 million Americans who have gambled this year, you are required to report your gambling winnings to the Internal Revenue Service (IRS). So, what if you don’t? Or, what if you have failed to report gambling winnings to the IRS in the past? Failing to report gambling winnings to the IRS can be very risky, as it presents risks for both civil and criminal penalties. Learn more from New York tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

IRS: “You Must Report All Gambling Winnings”

The IRS makes gamblers’ filing obligations abundantly clear: “You must report all gambling winnings on Form 1040 or Form 1040-SR (use Schedule 1 (Form 1040)), including winnings that aren't reported on a Form W-2G.” As the IRS also makes clear, taxpayers who have earned income from their gambling activities may need to make quarterly estimated tax payments as well.

If you don’t report your gambling winnings, you can face civil or criminal penalties for your failure to file—this is true regardless of whether you owe any tax. If you owe tax on your gambling winnings, failure to report your winnings can also lead to criminal tax evasion or tax fraud allegations.

The IRS is Targeting Gamblers in Criminal Tax Investigations

The IRS has recently been prioritizing its efforts to enforce taxpayers’ gambling-related obligations. IRS investigations targeting taxpayers’ underreporting of gambling winnings, overreporting of gambling losses, and other gambling-related tax violations are all common. Under federal law, all of these violations carry the potential for fines and prison time—and, in many cases, the IRS is working with the Justice Department to seek indictments on multiple charges.

What Can (and Should) You Do?

With this in mind, what can (and should) you do if you have concerns about facing gambling-related scrutiny from the IRS? Broadly speaking, in this scenario, you should:

• Ensure that You Are Compliant for the 2025 Tax Year – You should ensure that you are up to date on your quarterly filings and that you have the documentation you need to accurately file your annual return for 2025.
• Correct Any Past Filing Deficiencies Before the IRS Initiates an Inquiry (if Possible) – If you are not yet facing an IRS audit or criminal tax investigation, you should engage experienced tax counsel promptly to help you proactively resolve any past filing deficiencies.
• Prepare to Defend Against the IRS’s Investigation (if Necessary) – If you are facing an IRS audit or criminal tax investigation related to your gambling winnings, you should engage experienced tax counsel to help you defend against the inquiry right away.

Request a Confidential Call with New York Tax Attorney Kevin E. Thorn

Do you need to know more about what you can (and should) do to mitigate your risk of facing criminal tax charges related to your gambling winnings? If so, we encourage you to contact us today. Call 914-534-6004 or contact us online to schedule a confidential call with New York tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.