30% Alien Withholding Clarification Enacted

WASHINGTON (Oct. 11, 2004) -- Congress has passed the international tax bill, the FSC/ETI bill, and sent it to the President for signing. The President has indicated that he will sign the legislation.

As reported earlier, the bill includes the provision supported by the racing industry to clarify that the 30% alien withholding provision does not apply to nonresident aliens in foreign countries wagering on U.S. races through international pools. This is a significant victory for U.S racing and eliminates an obstacle to the initiation of world-wide betting pools on U.S. races. This could increase wagering on American racing and provide substantial additional income to tracks and horse owners.

The provision was included in the final bill through the efforts of Senators Jim Bunning (R-KY), Mitch McConnell (R-KY), Blanche Lincoln (D-AR) and Congressman Jim McCrery (R-LA).

Capitol Gains Holding Period Reduction

The bill passed does not include the reduction in the holding period for horses to qualify for capital gains treatment from 24 months to 12 months. Senator Bunning offered this as an amendment during the Conference between the House and Senate, but like almost every other amendment, it was not accepted.

Internet Gambling Provision Dropped from 9/11 Bill

As reported previously, on September 29 the House Financial Services Committee included the Internet gambling bill passed last summer by the House in its legislation in response to the 9/11 Commission recommendations. During consideration of that legislation in the Committee, Congressman Jay Inslee (D-WA) unexpectedly offered an amendment to the Internet gambling bill that was accepted by the Committee. After reviewing the change, it appeared to limit the industry-supported exclusion in the Internet bill. Fortunately, the Internet gambling bill was dropped from the 9/11 legislative package before it went to the House floor.