Casino Dealers at Odds With IRS Proposal to Levy Taxes on Tips

When gamblers tipped the blackjack dealers at Caesars Palace, the IRS had its hand out.

Although the dealers refused to hand over the money on Monday, the agents promised to be back with a court order, said Paul Nutter Jr., the dealer designated to oversee distribution of tips or “tokes” given to dealers.

The federal agents entered Caesars to serve levy notices on 17 of the resort’s dealers. The IRS contends that the 17 owe a combined $500,000 in delinquent taxes, according to Jeffrey Dickstein, Nutter’s attorney.

The agency must serve levy notices against the dealers before it can impose levies against financial assets such as wages or bank accounts.

Dealers report that the IRS recently issued levy notices against dealers at the Desert Inn, Sands and Bally’s resorts. The federal agency has refused to confirm the names of any of the casino-hotels where dealers have been targeted.

IRS officials say the levies against tip income are legal and will continue.

“It is clear to me the IRS is violating the law, and I would like to litigate this in court,” Dickstein said.

He said the IRS can impose a continuing levy only on wages and salaries, not on tips because they are “gifts” from players to dealers.

“If you take away a dealer’s tokes, a dealer cannot live and support his family on his salary income alone,” Dickstein said. “The whole thing is absurd.”