US casino: $ 1.1 million tax refund refused

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US casino: $ 1.1 million tax refund refused

The American casino operator Greenwood has failed to enforce a tax refund of 1.1 million euros. The Pennsylvania Supreme Court has now finally rejected the gaming provider’s claim. The current proceedings concerned tax payments from 2009 to 2011. It is exciting news when a casino operator wants money from the state these days. But on closer examination of the facts, it is noticeable that Greenwood has been trying for many years through legal channels to get $ 1.1 million back from the state of Pennsylvania. The background is that Greenwood is convinced that it paid too high taxes on slot machines from 2009 to 2011. It is exciting, however, that the courts did not deal with this issue at all. Greenwood made a fundamental mistake that has now finally become very expensive.

Missed your tax refund due to a mistake?

What was the mistake? Greenwood only filed for tax refund in 2014. Or to be more precise: Greenwood wanted a tax credit. The state did not have to pay at all, only had to credit Greenwood’s tax account with an amount of $ 1.1 million as a plus. But Pennsylvania has declined that payment because it is a state law that requires tax refunds to be claimed within three years. But this deadline had just expired, so that the state was right. For Greenwood, however, the situation was different and so it came to years of legal dispute. The Pennsylvania Supreme Court has now finally decided this dispute. The result is that Greenwood filed the application too late and therefore forfeited the right to a tax refund or tax credit. The company now sits on the legal fees and the court costs. In addition, the $ 1.1 million is missing from the balance sheet.

How did it come about that Greenwood fought in court for years to get the $ 1.1 million, despite the poor outlook? First of all, it should be noted that it is a large sum and that one or two surprises are possible, especially in American courts. In addition, the legal representation of Greenwood had determined that there was a difference whether it was a tax credit or a tax refund. The law expressly speaks of a tax refund, which must be requested within three years. But apparently the Pennsylvania courts were unwilling to engage in such quibbles. The Supreme Court also did not share the Greenwood attorney’s reasoning. It is unclear how the big mistake came about over a decade ago. Shouldn’t the company have noticed earlier that the tax burden was way too high? It has probably long been clarified who was responsible for this error. But that doesn’t change the fact that immense costs were incurred, which Greenwood now has to bear alone. It would be exciting to know if there are other Pennsylvania casinos that have had similar problems. The $ 1.1 million total suggests that there must have been a systematic error in the taxation of slot machines during the period in question. But maybe the other companies were just a little quicker and applied for tax refunds earlier. In any case, many people who are currently in economic difficulties should be pleased with the news about the refused tax payment. Not only in Pennsylvania has tax revenues gone down significantly due to the ongoing crisis, so every additional dollar counts.

Will there be large tax refunds after the crisis?

In the past few weeks there have been various reports from American gambling experts saying that many casinos might be able to apply for tax refunds. However, it is completely unclear what size it is. How taxes are levied also plays an important role. In Las Vegas, for example, it seems like the casinos have to pay taxes up front. The estimate of the tax amount is based on the previous income. If this is done consistently, it is very clear that at some point there will be larger tax refunds, because the revenue in Las Vegas has gone completely into the basement. But gambling is organized and regulated differently in each state, so it may well be that the casino operators in all states will not have the opportunity to get taxes back. In addition, government aid may also be offset, which many casinos also benefited from at the height of the crisis. It is currently far too early to be able to estimate how the financial situation with regard to taxes for American casinos will develop. What is clear, however, is that there have been major financial upheavals and that even the states that are dependent on gaming income will not voluntarily process gigantic tax refunds. There will probably be one or the other legal process to resolve disputed repayments.

In Pennsylvania, too, the state is currently having to forego a lot of money because, especially in the months of March, April and May, the revenue in the casino sector has plummeted. There’s been a solid rebound now, but the casinos are far from the old numbers. As a result, Pennsylvania’s gaming tax revenue this year will be significantly lower than in previous years. Pennsylvania does not necessarily need the gambling industry to thrive. But with many other industries in trouble too, it would be important for Pennsylvania if the casinos were back to good levels soon. However, it will be a long time before the 2019 numbers are reached again. The big casino centers like Las Vegas and Atlantic City are already back on track. But the somewhat smaller casinos in the USA are currently primarily concerned with getting through the crisis somehow without having to file for bankruptcy. All casinos that belong to large corporations are in a much better starting position. But the many small casinos and gambling halls that exist in the USA could end up falling victim to the crisis. Some gambling providers have already given up, not just in Pennsylvania. Basically, it all depends on how long the health crisis will ensure that normal business operations are not possible. A tax refund could probably be the decisive basis for one or the other gambling provider at the moment to hold out for a few more months.

Gambling providers under pressure in Germany too

So far, there has been nothing to be read about major tax refunds in the gaming industry in Germany. But it is completely clear that the casinos and amusement arcades have only made low sales in the last few months and therefore had to pay lower taxes. However, in Germany it is possible to adjust advance payments at short notice, so that in many cases it will not be necessary to make larger repayments. But especially with the large corporations, it could well happen that the state has to transfer a lot of money back. Amusement arcades and betting offices have long been open again in Germany. The casinos have long been able to receive customers again. But so far, many providers have not been able to show large sales. The restrictions imposed by the new hygiene regulations are significant and prompt many gambling fans to stay at home. In addition, the last few months have shown that there is a clear trend towards online gambling. During the crisis, many casino visitors may even have looked at online casinos for the first time. Currently there will still be many gambling fans who, for security reasons, would rather play at home on a smartphone than go to the nearest arcade. Numerous offline gaming providers are suffering considerably from this trend.

The operators of online casinos do not pay taxes in Germany. Therefore there can be no tax refunds. The online bookmakers pay a tax of five percent on every bet. But even at this point there will be no tax refunds, as the tax amount always depends directly on the stakes actually placed. In this respect, it is technically practically impossible for a bookmaker to transfer too much money to the tax office. It would be good for the German state if there were more casino operators and bookmakers in the future who have their headquarters in Germany. Then, at least at this company headquarters, tax revenue would also be generated. There are also some gambling experts who are demanding a casino tax similar to the betting tax. So far, however, these experts have not been able to assert themselves. It would be sensible and also reasonable in terms of acceptance if the online gaming providers in Germany contributed more to the national budget. The lottery providers are very popular not least because a large part of the money goes to the common good. When the sports betting tax was introduced in Germany, many providers complained. But the industry did not go under and it is now completely normal for many sports betting fans for bookmakers to charge a fee to finance the betting tax. A similar solution would also be possible in online casinos. But it will be a long time before there is a casino tax for online providers, because the new State Treaty on Gambling has only just been negotiated. There is no regulation of any casino tax in this paper. The gambling providers will be happy about it.

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