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Media Alerts - Park v. Commissioner of IRS
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July 9, 2013
  Park v. Commissioner of IRS
Headline: D.C. Circuit rejects IRS effort to tax non-resident alien gamblers differently from U.S. citizen gamblers

Area of Law: Taxation

Issue(s) Presented: Whether the IRS can tax non-resident alien gamblers on every winning bet or whether these gamblers can, like U.S. citizen gamblers, report net income from a complete session of gambling, offsetting gains by losses.

Brief Summary: Appellant, a South Korean businessman, gambled at slot machines in the United States and lost thousands of dollars. Under Section 871 of the Tax Code, "gains" are taxable income. The IRS interprets Section 871 differently for non-resident aliens and U.S. citizens. For U.S. citizens, the authoritative IRS interpretation of "gains" allows gamblers to measure gains on a per-session basis. Thus, a gambler who wins $100 and then loses $100 has a net taxable "gain" of zero. For non-resident aliens, however, the IRS interprets the same "gains" language differently, requiring a gambler to report that $100 as income. After losing at the Tax Court, Appellant appealed to the United States Court of Appeals for the D.C. Circuit. The D.C. Circuit reversed and remanded.

The court began by noting that, because the IRS's per-bet approach was not promulgated in an authoritative interpretation, it merited no Chevron deference. The court then determined that the IRS's interpretation of "gains" on a per-session basis for U.S. citizens was sensible and that nothing in its reasoning turned on the fact that gamblers were U.S. citizens. The court found persuasive the IRS's own reasoning that a per-session approach avoids the considerable administrative and practical difficulties that would arise if slot players had to track wins from every pull of the lever. Invoking the maxim that normally, the same terms have the same meaning in different provisions of the same statute, the court concluded that Section 871 of the Tax Code allows non-resident aliens to calculate gains, if any, on a per-session basis.

For the full text of the opinion, please see

Significance (if any): The D.C. Circuit clarifies application of the Tax Code to gambling gains.

Extended Summary (if applicable):

Panel (if known): Tatel, Kavanaugh, Sentelle

Argument Date (if known): 4/11/2013

Date of Issued Opinion: 7/9/2013

Docket Number: 12-1058

Decided: Reversed

Case Alert Author: Beske/Weistling

Counsel (if known): Denis M. McDevitt and Drew M. Bouchard for Appellants. John A. Dudeck Jr. and Richard Farber for Appellee.

Author of Opinion: Kavanaugh

Case Alert Circuit Supervisors: Elizabeth Beske and Ripple Weistling

    Posted By: Ripple Weistling @ 07/09/2013 11:15 AM     DC Circuit  

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