$70,017.47
+1.81%
$3,927.86
+2.14%
$86.04
+2.51%
$30.84
+2.86%
$143.02
-0.08%
$0.00
+1.81%
$32.30
+0.51%
$0.17
+1.26%
$27.67
+4.59%
$0.00
-1.45%

Week in Insights: Bingo! It’s Tax News


I have terrible luck. I am also a relentless optimist. It’s a weird combination that has not served me well when it comes to games of chance. Although I never win, I am hopeful that this game will be the one—every time. It never is. Luckily, I know enough not to play for cash and typically find myself simply out a stash of M&Ms.

I am particularly bad at bingo. While we tend to think of bingo as American—since it was first marketed in the U.S. as bingo—it got its start in Italy in 1530 as Lo Giuoco del Lotto d’Italia, or the Lotto game of Italy. The game, organized by the government and held weekly, is still played today.

Variations on the game have been played throughout the ages, but it wasn’t until 1929 that it was popularized in the U.S. A toy salesman, Edwin S. Lowe, saw a variation of Lotto called Beano being played at a carnival. Lowe made a mock-up version to play with friends. It was a hit—with a twist. One of his friends shouted “Bingo!” instead of “Beano!” when she won. The new name—thankfully—stuck.

People play Bingo at Carlton Bingo Hall in Orrell Park as the Chancellor George Osborne announces tax breaks for Bingo halls on March 19, 2014 in Liverpool, England.

Photographer: Christopher Furlong via Getty Images

After the game hit the market, Lowe was approached by a priest from Wilkes-Barre, Pennsylvania, who wanted to use the game as a fundraiser. Lowe agreed to help and eventually put his tips together in a bingo instruction manual. That manual turned into a newsletter where, he claimed to have “used more newsprint than The New York Times!”

Today, bingo and other kinds of gaming remain popular as fundraisers for churches and non-profit groups—so much so that many people associate those games with charitable activity. But, as the IRS notes in Pub 3079, “There is nothing inherently charitable about gaming.” Rather, “As a general rule, gaming is considered unrelated to exempt purposes.”

There are, however, exceptions to that rule—and bingo is one of them. Certain bingo games won’t be considered an “unrelated trade or business,” so long as they meet the definition of bingo under the IRC and Regulations (more on that in a bit), do not violate state or local law; and are played in a jurisdiction where bingo games are not regularly carried on by for-profit organizations.

In other words, it all comes down to the details, as it so often does when it comes to tax and accounting. A tax matter can turn on a specific fact pattern from the source of income, the nature of an expense—or the numbers of squares on a bingo card. Fortunately, this week, as always, our experts have the latest federal, state, and international tax analysis to help you stay ahead of the game—and leaving nothing to chance.

The Exchange… It’s where great ideas intersect.

—Kelly Phillips Erb

Quick Numbers Trivia

There is an official definition of bingo in the Tax Code and Regs as it relates to gaming. It’s defined as a game of chance played with cards with how many squares?
Answer at the bottom.

Our Roundup

This week, our experts touched on a wide range of topics, from multilateral controversies to Form 1099. For a look at what you can bet is making news, here’s our roundup:

The house doesn’t always win: Having a strategy is essential. In Part 1 of a two-part series, Mark Horowitz, Cameron Taheri, Theresa Kolish, Addisen Reboulet, and Thomas Bettge of KPMG’s Washington National Tax Group examine how important it is for taxpayers to understand how to effectively engage with tax authorities when confronted with multilateral tax issues. In Part 2, the group looks into procedures and best practice recommendations for managing multilateral controversy.

Blind bets can be scary—whether in gaming or tax, you want to know what’s coming next. In Major VAT Changes for Trade Between E.U. and Northern Ireland, Aiki Kuldkepp of Grant Thornton highlights some significant VAT changes affecting businesses engaged in trade between the E.U. and Northern Ireland and discusses how businesses need to manage these rules.

Dice and chips on a craps table at the Excalibur Hotel & Casino in Las Vegas.

Photographer: Ethan Miller via Getty Images

Figuring out changes in reporting rules shouldn’t be a crapshoot. In New Form 1099 Reporting Coming in 2022, Debbie Pflieger of EY’s Financial Services Organization highlights what you need to know about Form 1099-K, Payment Card and Third-Party Network Transactions.

Understanding what’s at stake helps when laying your cards on the table. In Ecuador Introduces Tax Reforms to Boost the Economy and Attract Investment, Diego Andrés Almeida and Cesar Molina of Almeida Guzmán & Asociados outline the fundamental measures included in Ecuador’s recently enacted tax reform program and their key role in ensuring the country’s continued economic recovery.

You know what you hope will happen when you play the slots—but the reality is that there are many possible outcomes. What if the same is true when it comes to excise taxes? From sugar to cigarettes, raising taxes on certain products is intended to reduce unhealthy or undesirable behaviors. These taxes—called sin taxes—may be effective in decreasing the use of those products, but is that the only consequence? In Caught Cheating: When Sin Taxes Forge Unforeseen Fallout, Thomas Shohfi, David Kenchington, Jared Smith, and Roger White recently published a paper that questions the unintended consequences of sin taxes might be.

At the table, the buy-in is important—the same is true in tax planning. In Part 2 of a two-part article, Eugen Trombitas of PwC NZ looks at what future global indirect tax trends are taking shape and considers why tax authorities and governments are likely to make indirect taxes a priority. In Part 1, Trombitas reviews the main developments in indirect tax in New Zealand during 2021.

Opinion and Commentary

In Student-Loan Relief Loses Steam in Hot Economy, Brian Chappatta of Bloomberg News warns: Get ready to hear about Americans’ $1.58 trillion of student loans again.

President Joe Biden’s executive order directing federal agencies to improve the online user experience won’t push inflation out of the headlines or help his stalled Build Back Better proposal. But it is a good idea, suggests Matthew Yglesias in Biden’s Stealth Plan to Help Save Democracy. He say that underneath all the details lies a deeper rationale: The best way for democratic states to counter domestic populism and foreign authoritarianism is to show that they can make government work on a day-to-day basis for ordinary people.

President Biden says his Build Back Better plan aims to confront the “existential threat of climate change.” So, it’s unfortunate that in privileging union jobs over just about any other goal, a crucial element of the legislation would do just the opposite, Bloomberg Editors Timothy Lavin and Romesh Ratnesar opine in Biden’s E.V. Tax Credits Are a Needless Gift to Unions.

Columnists & Contributors

At this time of year, there are tons of articles explaining how you can reduce your tax bill in 2021. And after the year we’ve had, it all feels like so much work. But tax planning doesn’t have to be time-consuming or complicated. Sometimes, it can be a simple adjustment or a quick glance at your accounts to make sure you’re on track. Here’s a look at seven low-key year-end tax moves to make in 2021—some that you can even accomplish from the comfort of your sofa.

Spotlight

Our Spotlight series highlights the careers and lives of tax professionals across the globe. This week’s Spotlight is on EA and author Lily Tran.

Listen In

Cryptocurrencies had a big year in 2021. The U.S. has made efforts in recent months to develop rules that would require cryptocurrency exchanges to track the activity of traders. On this week’s Talking Tax episode, Bloomberg Tax’s Hamza Ali speaks with Sulolit “Raj” Mukherjee, head of…



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