To amend the Internal Revenue Code of 1986 to regulate and tax Internet gambling.

Summary: Internet Gambling Regulation and Tax Enforcement Act of 2009 - Amends the Internal Revenue Code to: (1) impose an Internet gambling license fee on Internet gambling operators and an additional tax on unauthorized bets or wagers; (2) require such operators to file informational returns identifying themselves and the individuals placing bets or wagers with them; (3) require withholding of tax on net Internet gambling winnings and on the winnings of nonresident aliens; and (4) extend the excise tax on wagers to include wagers placed within the United States or any commonwealth, territory, or possession by a U.S. citizen or resident.

SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE.

    (a) Short Title.--This Act may be cited as the ``Internet Gambling 
Regulation and Tax Enforcement Act of 2009''.
    (b) Amendment of 1986 Code.--Except as otherwise expressly 
provided, whenever in this Act an amendment is expressed in terms of an 
amendment of a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Internal 
Revenue Code of 1986.

SEC. 2. TAX ON INTERNET GAMBLING; LICENSEE INFORMATION REPORTING.

    (a) In General.--Chapter 36 (relating to certain other excise 
taxes) is amended by adding at the end the following new subchapter:

                   ``Subchapter E--Internet Gambling

``Sec. 4491. Imposition of Internet gambling license fee.
``Sec. 4492. Record requirements.

``SEC. 4491. IMPOSITION OF INTERNET GAMBLING LICENSE FEE.

    ``(a) Federal Fee.--Each licensee within the meaning of section 
5382 of title 31, United States Code, shall be required to pay an 
Internet gambling license fee by the end of each calendar month in an 
amount equal to two percent of all funds deposited by customers during 
the preceding month into an account maintained by that licensee or any 
agent of that licensee that can be used for the purpose of placing a 
bet or wager as defined in section 5362(1) of title 31, United States 
Code.
    ``(b) Deposits.--Deposits made by or on behalf of a licensee of 
Internet gambling winnings or returns of funds by or on behalf of a 
licensee to the account of a customer shall not be treated as a deposit 
for purposes of this section.
    ``(c) Persons Liable for Fee.--The Internet gambling license fee 
shall be the direct and exclusive obligation of the Internet gambling 
operator and may not be deducted from the amounts available as deposits 
to the person placing a bet. Notwithstanding the foregoing, any person 
making a deposit for the purpose of placing a bet or wager with a 
person who is required but has failed to obtain a license pursuant to 
subchapter V of chapter 53 of title 31, United States Code, shall be 
liable for and pay the fee under this subchapter on all such deposits, 
but such liability shall not excuse any failure to pay the fee on the 
part of the person who is required but has failed to obtain such 
license.
    ``(d) Unauthorized Bets or Wagers.--There is hereby imposed a fee 
in an amount equal to 50 percent of all funds deposited into an account 
that can be used for placing a bet or wager within the meaning of 
Section 5362(1) of title 31, United States Code, with any person that 
is not authorized pursuant to section 5382 of that title. Such tax is 
due by the end of each calendar month with respect to deposits during 
the preceding month.
    ``(e) Disposition.--Amounts paid as Internet gambling license fees 
or on unauthorized bets or wagers under this section shall be deposited 
in the general fund of the Treasury and treated as revenue.
    ``(f) Administrative Provisions.--Except to the extent the 
Secretary shall by regulations prescribe, the fees imposed by this 
section shall be subject to the administrative provisions of this title 
applicable to excise taxes imposed by chapter 35.

``SEC. 4492. RECORD REQUIREMENTS.

    ``Each person liable for fees under this subchapter, except for a 
person making a deposit who is liable for fees pursuant to section 
4491(e), shall keep a daily record showing deposits as defined in this 
subchapter, in addition to all other records required pursuant to 
section 6001(a).''.
    (b) Information Returns.--Subpart A of part III of subchapter A of 
chapter 61 (relating to information concerning persons subject to 
special provisions) is amended by adding at the end the following new 
section:

``SEC. 6050X. RETURNS RELATING TO INTERNET GAMBLING.

    ``(a) Requirement.--Every person who is a licensee (within the 
meaning of section 5382(3) of title 31, United States Code) or who 
otherwise is engaged in the business of accepting any bet or wager 
within the meaning of section 5362(1) of title 31, United States Code, 
during a taxable year shall furnish, at such time and in such manner as 
the Secretary shall by regulations prescribe, the information described 
in subsection (b), and such person shall maintain (in the location, in 
the manner, and to the extent prescribed in regulations) such records 
as may be appropriate to the information described in subsection (b).
    ``(b) Required Information.--For purposes of subsection (a), the 
information described is set forth below, which information may be 
modified as appropriate by the Secretary through regulation--
            ``(1) the name, address, and TIN of the licensee or other 
        person engaged in the business of accepting any bet or wager,
            ``(2) the name, address, and TIN of each person placing a 
        bet or wager with the licensee or other person engaged in the 
        business of accepting any bet or wager during the calendar 
        year,
            ``(3) the gross winnings, gross wagers, and gross losses 
        for the calendar year of each person placing a bet or wager 
        with the licensee or other person engaged in the business of 
        accepting any bet or wager during the year,
            ``(4) the net Internet gambling winnings for each such 
        person for the calendar year,
            ``(5) the amount of tax withheld with respect to each such 
        person for the calendar year,
            ``(6) beginning and end-of-year account balances for each 
        such person for the calendar year, and
            ``(7) amounts deposited and withdrawn by each such person 
        during the calendar year.
    ``(c) Statement To Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each person whose name is required to 
be set forth in such return by reason of placing a bet or wager a 
written statement showing--
            ``(1) the name, address, and phone number of the 
        information contact of the person required to make such return, 
        and
            ``(2) the information required to be shown on such return 
        with respect to each person whose name is required to be set 
        forth in such return.
The written statement required under the preceding sentence shall be 
furnished to the person on or before January 31 of the year following 
the calendar year for which the return under subsection (a) was 
required to be made.
    ``(d) Definitions.--
            ``(1) Net internet gambling winnings.--The term `net 
        Internet gambling winnings' means gross winnings from wagers 
        placed over the Internet with a person required to be licensed 
        under section 5382 of chapter 53 of title 31, United States 
        Code, less the amounts wagered.
            ``(2) Internet; wager.--The terms `Internet' and `wager' 
        shall have the respective meanings given such terms by section 
        5362 of chapter 53 of title 31, United States Code.''.
    (c) Clerical Amendments.--
            (1) The table of subchapters for chapter 36 is amended by 
        adding at the end the following new item:

                 ``subchapter e. internet gambling.''.

            (2) The table of sections for subpart B of part III of 
        subchapter A of chapter 61 is amended by inserting after the 
        item relating to section 6050W the following new item:

``Sec. 6050X. Returns relating to Internet gambling.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to bets or wagers placed after the date of the enactment of this 
Act.

SEC. 3. WITHHOLDING FROM CERTAIN GAMBLING WINNINGS.

    (a) Net Internet Gambling Winnings.--Paragraph (3) of section 
3406(b) (relating to other reportable payments for purposes of backup 
withholding) is amended--
            (1) by striking ``or'' in subparagraph (E);
            (2) by striking ``.'' and inserting ``, or'' at the end of 
        subparagraph (F); and
            (3) by adding at the end thereof the following new 
        subparagraph:
                    ``(G) section 6050X(b)(4) (relating to net Internet 
                gambling winnings).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bets or wagers placed after the date of the enactment of this Act.

SEC. 4. WITHHOLDING OF TAX ON NONRESIDENT ALIENS.

    (a) Tax on Nonresident Alien Individuals.--Paragraph (1) of section 
871(a) (relating to income not connected with United States business) 
is amended--
            (1) by striking ``and'' at the end of subparagraph (C),
            (2) by inserting ``and'' at the end of subparagraph (D), 
        and
            (3) by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) the gross amount of winnings from each wager 
                placed over the Internet with a person required to be 
                licensed under section 5382 of chapter 53 of title 31, 
                United States Code (as such terms are defined in 
                section 6050X(d)(2)),''.
    (b) Exemption for Certain Gambling Winnings.--Section 871(j) 
(relating to exemption for certain gambling winnings) is amended by 
inserting before the period at the end the following: ``or to any bets 
or wagers placed over the Internet (as such terms are defined in 
section 6050X(d)(2))''.
    (c) Withholding of Tax on Nonresident Alien Individuals.--The first 
sentence of subsection (b) of section 1441 (relating to withholding of 
tax on nonresident aliens) is amended by inserting after ``gains 
subject to tax under section 871(a)(1)(D),'' the following: ``the gross 
amount of winnings from wagers placed over the Internet described in 
section 871(a)(1)(E),''.
    (d) Source of Internet Gambling Winnings.--Subsection (a) of 
section 861 is amending by inserting at the end thereof the following 
new paragraph:
            ``(9) Internet gambling winnings.--Any Internet gambling 
        winnings received from a licensee within the meaning of section 
        5382(3) of title 31, United States Code.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to bets or wagers placed after the date of the enactment of this 
Act.

SEC. 5. TERRITORIAL EXTENT.

    Paragraph (2) of section 4404 is amended to read as follows:
            ``(2) placed within the United States or any Commonwealth, 
        territory, or possession thereof by a United States citizen or 
        resident.''.