North Carolina lawmakers passed a comprehensive tax bill last week that requires NC sports betting companies to report bettors who made more than $2,000 in gross winnings to the state.
SB 595 requires NC sports betting operators to report any bettors who made more than $2,000 in winnings. It gives the state access to verify whether bettors reported their winnings on taxes, including retroactively for the prior year.
Under state law, sports betting winnings are treated as taxable income subject to North Carolina’s 4.5% flat state income tax rate on gross winnings. North Carolina does not permit bettors to deduct gambling losses from their state tax return.
The legislation still needs Gov. Josh Stein’s signature.
North Carolina taxes due regardless of residency
The bill requires sportsbooks to report any bettor earning $2,000 or more annually to state authorities.
“The Secretary shall, no more than one time per calendar year, request an interactive sports wagering operator to report the information required in this subsection to the Secretary for every registered player that received winnings of at least $2,000 in the prior calendar year,” the legislation reads.
The reporting requirement aligns with federal protocols and gives the state’s Department of Revenue comprehensive bettor data including full names, residential addresses, taxpayer identification numbers, betting activity, results and aggregate winnings. Previously, compliance relied largely on bettors self-reporting.
The reporting requirement appears to apply to any bettor earning $2,000 or more, regardless of residency, if they win the money through a North Carolina betting app. The Department of Revenue will now know what was won and cross-reference that against what is filed.
Tax rate increase still pending
Lawmakers are also working to finalize the state budget. They have reportedly agreed on a new tax rate for sports betting, raising it to 23% from 18%.
The new rate is still pending as part of the budget framework before the July 1 fiscal year start, and it has not yet been formally passed into law.
The tax rate increase was discussed during negotiations that at one point included proposals as high as 50%, with the final figure representing a compromise reached during the legislative process.
It is the second-straight session with a proposed tax hike, as last year, the Senate passed a budget version with an increase to 36%.
