Frequently Asked Questions Regarding the Excise Tax on Interactive Sports Wagering Operators and Winnings for Income Tax Purposes
August 16, 2024 Summary
A1: An interactive sports wagering operator must register with the North Carolina Department of Revenue by electronically filing Form S-W-100, Interactive Sports Wagering Registration Form. After Form S-W-100 is filed, the interactive sports wagering operator will receive additional information from the Department regarding compliance with Article 2E.
The interactive sports wagering operator may file Form S-W-100 by accessing the Department’s website. The form can be completed by clicking “File Online” located under the “Registration and Other Forms” tab. Alternatively, the interactive sports wagering operator may directly access and file the Form S-W-100.
A2: Yes. The Secretary will require all interactive sports wagering operators to obtain a bond or irrevocable letter of credit.
A3: After an interactive sports wagering operator files Form S-W-100 to register with the Department, the interactive sports wagering operator will receive a letter from the Department, which will include instructions on completing the bond (Form S-W-200, Interactive Sports Wagering Surety Bond) or the irrevocable letter of credit. Neither the bond nor the irrevocable letter of credit can be completed electronically.
The interactive sports wagering operator may obtain the bond form and irrevocable letter of credit template. The form and template can be located under the “Bond Forms” tab. Alternatively, the interactive sports wagering operator may directly access these documents at the following addresses:
Bond Form (Form S-W-200)
Irrevocable Letter of Credit Template
A4: An interactive sports wagering operator must electronically file the following return and associated forms:
- Form S-W-101, Interactive Sports Wagering Operator Return
- If applicable, Form S-W-101CF, Carryforward Amount
The above forms are due on the 20th day of the month following the calendar month covered by the return.
A5: An interactive sports wagering operator must electronically file Form S-W-101 and, if applicable, Form S-W-101CF as described below:
Form S-W-101, Interactive Sports Wagering Operator Return
The interactive sports wagering operator may file Form S-W-101. The form can be completed by clicking “File Online” located under the “Return & Payment Voucher” tab. Alternatively, the interactive sports wagering operator may directly access and file Form S-W-101 through the following link: Form S-W-101.
Form S-W-101CF, Carryforward Amount
For each month that a carryforward is claimed by the interactive sports wagering operator, the operator must upload Form S-W-101CF when completing Form S-W-101. The interactive sports wagering operator may obtain Form S-W-101CF.
A6: The interactive sports wagering operator may pay the excise tax by: (1) wire transfer; or (2) check or money order.
Wire Transfer
An interactive sports wagering operator may pay tax due through a wire transfer in the form of US currency. The wire transfer information can be obtained by calling the Excise Tax Division.
The OBI (Originator to Beneficiary Information) Field must contain certain information for the Department to process the payment. For tax due on a return, the OBI must include “Sports Wagering [Return Month/Year].” For tax due in response to a notice, the OBI must include “Sports Wagering [Notice Number].”
Check or Money Order
Check or money orders must be in the form of US currency from a domestic bank and payable to the NC Department of Revenue. The interactive sports wagering operator must also complete Form S-W-101V, Interactive Sports Wagering Voucher and send it along with the payment. The payment and voucher must be mailed to the following address:
North Carolina Department of Revenue
Excise Tax Division – ATTN: Financial Unit
3301 Terminal Drive
Suite 125
Raleigh, North Carolina 27604
The interactive sports wagering operator may obtain the voucher by accessing the Department’s website. The form can be located under the “Return & Payment Voucher” tab. Alternatively, the interactive sports wagering operator may directly access the voucher.
A7: Prior period adjustments are not allowed on current returns. If an interactive sports wagering operator must amend a previously filed Interactive Sports Wagering Operator Return, an interactive sports wagering operator must complete another online Form S-W-101, Interactive Sports Wagering Operator Return showing the entire return information for the amended period. Do not file the form only showing the amended adjustments. The interactive sports wagering operator must also mark the return as amended by designating the return as an amended return.
If the interactive sports wagering operator owes additional tax, the operator must remit payment to the Department in accordance with Q/A #6.
A8: If the amount of the gross wagering revenue is a negative number for any month, the interactive sports wagering operator may carry forward the negative amount to the return filed for the subsequent month. No amount may be carried forward more than 12 months after the month in which the amount carried forward was determined.
A9: An interactive sports wagering operator may request a refund through a credit on the return for the amount refunded. If an operator refunds the sports wager in the same month the operator received revenue from the sports wager, the operator may deduct the amounts refunded on Lines 1 and 2 on Form S-W-101. If the refund is issued after the month the operator received revenue from the sports wager, the operator may deduct the amounts refunded on a subsequent monthly return. The interactive sports wagering operator must include all documentation regarding the refund. The refund request must be submitted within the statute of limitations as
provided in N.C. Gen. Stat. § 105-241.6.
A10: The Department will refer an interactive sports wagering operator’s violations of Article 2E of Chapter 105 of the North Carolina General Statutes to the Lottery Commission. The Lottery Commission may revoke the license or deny license renewal due to these violations.
A11: No, an operator is not required to withholding North Carolina income tax from winnings.
A12: The interactive sports wagering operator must report all money or cash equivalent amounts received from sports wagers for the month the interactive sports wager operator received the amounts. Therefore, the total wagering revenue used to calculate gross wagering revenue is not determined after the sports wager is settled.
A13: Yes, promotional offers are included in determining gross wagering revenue. They must be separately reported on Line 2 of Form S-W-101.
A14: Yes, even if the amounts wagers are later determined to be invalid, the amounts must be included in determining gross wagering revenue.
A15: Yes. The starting point for determining an individual’s North Carolina taxable income is federal adjusted gross income (“AGI”). To the extent that gambling winnings are included in a registered player’s federal AGI, the income is taxed by North Carolina.
For additional information about gambling winnings, see IRS Topic no. 419, Gambling income and losses.
A16: Yes. Because under federal law all gambling winnings are considered gross income, a registered player must include all winnings in the calculation of North Carolina taxable income, including any winnings not reported on a Form W-2G. For additional information about gambling winnings, see IRS Topic no. 419, Gambling income and losses.
A17: No. For federal income tax purposes, a registered player may deduct gambling losses as an itemized deduction on federal Form 1040 Schedule A. North Carolina itemized deductions are not identical to federal itemized deductions and are limited to the deductions provided under G.S. 105-153.5(a)(2). Gambling losses are not included in the list of allowable North Carolina itemized deductions.