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Rep. McDermott launches HR2230

Sense of deja vu as Rep. McDermott launches HR2230
A sense of deja vu was perhaps inevitable this week as Congressman Jim McDermott launched HR2230, the  Internet Gambling Regulation and Tax Enforcement Act, in the House Financial Services Committee, supported by Representative John Campbell and the committee's ranking Democrat member Barney Frank.
Deja vu, because McDermott was the man behind previous online gambling tax proposals launched to back up Frank's earlier federal attempts to regulate and licence online gambling in the United States.
The objective apparently remains the same with McDermott's latest offering; Frank and Campbell spearhead a renewed bipartisan attempt at legalisation due in the current session of Congress, and this will need a supporting tax bill.
McDermott's latest sally requires online gambling establishments to withhold taxes from net online winnings, and provide detailed information about gamblers to the government to ensure the collection of the appropriate taxes. It would also impose a two percent federal tax on Internet gambling providers, and give individual states the option of taxing these companies at a rate of six percent, according to the newspaper The Hill.
McDermott staffers have been quick to point out that his new bill does not specifically seek to legalise online gambling, but is intended as a companion bill to offer a tax structure for online gambling assuming that it becomes legal via other measures (read: the new Frank-Campbell bill).
Assuming online gambling is so legalised, McDermott's bill would require companies to subject net online winnings to a withholding tax, now 28 percent, in line with current withholding taxes for other gambling winnings.
Operators would be required to provide the names, addresses and tax identification numbers of all players to the government. They would also have to provide information on gross winnings, gross wagers and gross losses on each person for every calendar year, and the amount of tax withheld on these winnings, in addition telling the government how much has been deposited and withdrawn during the calendar year.
The bill would also require online gambling operators to obtain a licence, and would tax these companies an amount equal to two percent of the deposits they receive each month. The bill stresses that this tax cannot be deducted from the amounts that players deposit in their account, and must be paid for by the company.
It would also give states the option of taxing operators at a rate of six percent.
In similar fashion to his previous tax proposals, McDermott's bill would send 25 percent of the federal taxes collected to programs that care for foster or disadvantaged children, and most of the rest would go to the general treasury.

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