Paid tax professionals aren’t permitted to endorse or otherwise negotiate a refund check issued to a taxpayer. This is true, even if the taxpayer requests their refund be directed into the paid tax professional’s bank account or in his/her name. Failure to comply could result in an Inter REvenue Code, Section 6695(f) penalty of $510 for each tax return with no maximum penalty amount and no reasonable cause exceptions.

This brings up the point regarding companies who advertise refunds of withholding of U.S. gambling winnings and insist that the refund go directly to their office.

Other potential violations of IRS rules are a U.S. tax preparer charging a client a contingency fee typically disallowed on a withholding tax refund claim and fraudulent offsetting by claiming nonexistent gambling losses in the year of winnings.

So a Canadian can maximize the benefits of a legitimate casino withholding claim, one should be sure to keep or obtain complete records of all of one’s casino losses (and winnings reported on 1042-S) as those records are required in most cases in order to support a refund claim on the winnings.

Have questions? Contact Daniel Gray.