T.C. Summary Opinion 2001-92

UNITED STATES TAX COURT

PAUL S. LEBLANC, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 13599-99S. Filed June 22, 2001.

Paul S. LeBlanc, pro se.

Linda A. Neal, for respondent.

DINAN, Special Trial Judge: This case was heard pursuant to

the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed. The decision to be

entered is not reviewable by any other court, and this opinion

should not be cited as authority. Unless otherwise indicated,

subsequent section references are to the Internal Revenue Code in

effect for the year in issue.
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Respondent determined a deficiency in petitioner’s Federal

income tax of $504 for the taxable year 1996.

The issue for decision is whether requiring petitioner to

include unreported gambling winnings in income violates the

constitutional right to equal protection.

Some of the facts have been stipulated and are so found. 

The stipulations of fact and the attached exhibits are

incorporated herein by this reference. Petitioner resided in

Gretna, Louisiana, on the date the petition was filed in this

case.

Petitioner filed a joint Federal income tax return for 1996

with his now deceased wife, Jacquelyn S. LeBlanc. Petitioner’s

wife received a Form W-2G, Statement for Recipient of Certain

Gambling Winnings, reflecting 1996 slot machine winnings of

$1,773.61. However, no income from gambling was reported on

their return. In the statutory notice of deficiency, respondent

determined that petitioner had unreported gambling income of

$1,773.

Gross income generally includes income from whatever source

derived, including gambling winnings. See sec. 61(a); Umstead v.

Commissioner, T.C. Memo. 1982-573. Gambling losses generally are

allowed to the extent of the gambling winnings for the taxable

year. See sec. 165(a), (d). A nonprofessional gambler may claim
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such losses as itemized deductions if he elects to forgo the

standard deduction. See sec. 63.

Petitioner admits that his wife received slot machine

winnings in the amount of $1,773 in 1996, that this amount was

not reported on their tax return, and that this amount is income

subject to the Federal income tax. Petitioner argues that the

taxation of the gambling winnings in his case is “unequal

treatment under the law,” in violation of the “equal protection

as well as equal treatment” afforded by the United States

Constitution. Petitioner argues that certain taxpayers escape

taxation on their gambling winnings because casinos do not issue

informational returns for all taxpayers who receive such

winnings.

Although the Equal Protection Clause in the Fourteenth

Amendment limits the powers of the States, there is no comparable

clause explicitly applicable to Federal legislation. However,

the Due Process Clause of the Fifth Amendment has been construed

as imposing an equal protection requirement in respect of

classification to the extent that “discrimination [resulting from

such classification] may be so unjustifiable as to be violative

of due process.” Bolling v. Sharpe, 347 U.S. 497, 499 (1954)

(fn. ref. omitted).

In evaluating whether a statutory classification violates

equal protection, we generally apply a rational basis standard. 
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See Regan v. Taxation With Representation, 461 U.S. 540, 547

(1983). We apply a higher standard of review only if it is found

that the statute (1) impermissibly interferes with the exercise

of a fundamental right, such as freedom of speech, or (2) employs

a suspect classification, such as race. See, e.g., id.; Harris

v. McRae, 448 U.S. 297, 322 (1980). Neither of these exceptions

applies in this case. Under the rational basis standard, a

challenged classification is valid if rationally related to a

legitimate governmental interest. See City of Cleburne v.

Cleburne Living Ctr., Inc., 473 U.S. 432, 440 (1985); City of New

Orleans v. Dukes, 427 U.S. 297, 303 (1976). Legislatures have

especially broad latitude in creating classification and

distinctions in tax statutes. See Regan v. Taxation With

Representation, supra at 547.

The informational return which petitioner’s wife received in

this case was required by section 6041 and the accompanying

regulations. As a general rule, a person engaged in a trade or

business who makes a payment to an individual in excess of $600

must provide an informational return to the Secretary of the

Treasury (or his delegate) and to the individual. See sec.

6041(a), (d). A person engaged in a trade or business who pays

winnings to an individual of $1,200 or more from a bingo game or

slot machine play, or of $1,500 or more from a keno game, must

provide such an informational return. See sec. 7.6041-1(a),
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Temporary Income Tax Regs., 42 Fed. Reg. 1471 (Jan. 7, 1977). 

This latter return must be made on a Form W-2G. See sec. 7.6041-

1(c), Temporary Income Tax Regs., supra; see also sec.

31.3402(q)-1(f), Employment Tax Regs. (Form W-2G payer reporting

requirements for purposes of withholding). In determining the

amount won from such games, the amount wagered is deducted from

the winnings in a keno game, but is not deducted in a bingo game

or slot machine play. See sec. 7.6041-1(b)(1), (2), Temporary

Income Tax Regs., supra. Winnings from more than one game are

not aggregated. See sec. 7.6041-1(b)(5), Temporary Income Tax

Regs.

Legislation enacted in 1917 added informational reporting

requirements to the Internal Revenue Code similar to the current

provisions under section 6041. See Act of October 3, 1917, ch.

63, tit. XII, sec. 1211, 40 Stat. 300. The Senate report

accompanying this legislation stated:

That the provisions of the law requiring withholding at

the source of the tax due on profits or incomes of

resident taxable persons be repealed and instead there

be substituted “information at the source,” where the

amount of income received in any taxable year and paid

over to the taxable person exceeds $800 for any taxable

year. * * * The proposed amendment is conducive to a

more effective administration of the law in that it

will enable the Government to locate more effectively

all individuals subject to the income tax and to

determine more accurately their tax liability. This is

of prime importance from a viewpoint of collections. 

In addition to this very important consideration, the

changes will result in the saving of annoyance and

expense to taxpayers and withholding agents in

lessening of expense to the Government, and in
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simplifying administration, and in increased

effectiveness * * * 

It is the Treasury Department’s judgment, based

upon close observation and study of the practical

workings of the withholding feature of the income-tax

law as well as of the general requirements of

administration, that information at the source is a

foundation upon which the administrative structure must

be built if the income-tax law is to be rendered most

effective and if due regard is to be paid to economy

and simplicity of administration and to the imposition

of no greater burden and expense upon taxpayers than is

necessary for effective administration. [S. Rept. 103,

65th Cong., 1st Sess. (1917), 1939-1 C.B. (Part 2) 56,

67-68.]

We find petitioner’s argument to be without merit. There is

no provision in the Internal Revenue Code which relieves a

taxpayer from liability for the income tax on gambling winnings

if the winnings are not reported by the payer. Thus, petitioner

essentially is arguing that he has not been afforded equal

protection because those taxpayers whose winnings were not

reported on informational returns have an easier time evading the

Federal tax laws. The statutory requirements for informational

returns classifies individuals according to the amount of

gambling winnings they pay to others. These classification

requirements are rationally related to the legitimate

governmental interest of balancing the need for reporting

requirements to ensure compliance with the tax laws and the need

to avoid imposing excessive burdens on covered individuals. 

Requiring a casino to report every dollar won from every slot

machine would undoubtedly be such a burden.
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An aspect of petitioner’s argument apparently is that the

casino was not complying with the law by not issuing

informational returns when required. Petitioner has provided no

evidence supporting this assertion, and even if he had it is

unclear how such noncompliance by the casino would bear on an

equal protection claim by petitioner.

We hold that requiring petitioner to include unreported

gambling winnings in income does not violate the constitutional

right to equal protection.

Reviewed and adopted as the report of the Small Tax Case

Division.

To reflect the foregoing,

Decision will be entered

for respondent.