When gambling in the United States, a W2-G form is used to report gambling winnings. The form must be filled out in states where gambling is legal, based on certain amounts, and then any federal taxes listed that are withheld from the winnings. Personal information is provided on the form and used to pay players when filing taxes. One New Jersey gambler decided to try and use the form system to his own gain and will now pay the price for it.
Fake Tax Scheme
Michael Watsey, a 43-year-old man from Middlesex County New Jersey appeared in court last Friday, admitting he faked the federal government by working with others to create fake forms documenting gambling winnings. The forms were printed from a home computer and the IRS then reviewed the forms and provided a tax refund. The scheme went on for quite some time before government officials stepped in.
Watsey worked with family members as well as other individuals to file 16 fake income tax returns, from a time period spanning from 2014 to 2016. The fake WG-forms netted the group a total of $1.3 million refunds. The forms falsely claimed $3.9 million from casinos located in Atlantic City.
In court, Watsey stated that he made the forms at home via his own computer. He then sent the documents to the IRS when he was asked about winnings. He even went so far as to pretend he was a host at a casino during a telephone call with a representative from the IRS. This was a bold move, but most likely needed as officials tried to follow up on Watsey’s claims.
Watsey has now pled guilty in federal court and is charged with one count of conspiracy to defraud the US with respect to claims. He will be sentenced in April and could spend up to 10 years in prison. His family members and other individuals involved in the scheme have not been named.
How the Scheme Worked
It is unclear how Watsey was able to create the fake forms to fool the IRS. The form can easily be downloaded via a computer from the IRS website, but the details of each ‘win’ would have to be provided. So, Watsey was being pretty bold in his attempt to fake out government officials.
The form requires the name of the payer as well as reportable winnings, the type of wager, date won, federal income tax withheld, the federal identification number of the payer as well as the winner’s name, street address, city, state, etc. With this info, Watsey had to hope that the IRS would not contact the named Atlantic City casino in order to check the claim.
All the details had to be filled out correctly and get by the IRS. The scheme seemed to work for a few years but Watsey most likely pushed his luck and now faces the consequences for his actions. It is unclear if the others involved will face the same sentencing or charges as Watsey.