26 U.S.C. § 4401

Imposition of tax

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(a) Wagers(1) State authorized wagers

There shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager.

(2) Unauthorized wagers

There shall be imposed on any wager not described in paragraph (1) an excise tax equal to 2 percent of the amount of such wager.

(b) Amount of wager

In determining the amount of any wager for the purposes of this subchapter, all charges incident to the placing of such wager shall be included; except that if the taxpayer establishes, in accordance with regulations prescribed by the Secretary, that an amount equal to the tax imposed by this subchapter has been collected as a separate charge from the person placing such wager, the amount so collected shall be excluded.

Each person who is engaged in the business of accepting wagers shall be liable for and shall pay the tax under this subchapter on all wagers placed with him. Each person who conducts any wagering pool or lottery shall be liable for and shall pay the tax under this subchapter on all wagers placed in such pool or lottery. Any person required to register under section 4412 who receives wagers for or on behalf of another person without having registered under section 4412 the name and place of residence of such other person shall be liable for and shall pay the tax under this subchapter on all such wagers received by him.

(Aug. 16, 1954, ch. 736, 68A Stat. 525; Pub. L. 85–859, title I, § 151(a), Sept. 2, 1958, 72 Stat. 1304; Pub. L. 93–499, § 3(a), Oct. 29, 1974, 88 Stat. 1550; Pub. L. 94–455, title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1834; Pub. L. 97–362, title I, § 109(a), Oct. 25, 1982, 96 Stat. 1731.)Editorial NotesAmendments

1982—Subsec. (a). Pub. L. 97–362 substituted provision that there shall be imposed on any wager authorized under the law of the State in which accepted an excise tax equal to 0.25 percent of the amount of such wager and that there shall be imposed on any other wager an excise tax equal to 2 percent of the amount of such wager for provision that there be imposed on wagers, as defined in section 4421, an excise tax equal to 2 percent of the amount thereof.

1976—Subsec. (b). Pub. L. 94–455 struck out “or his delegate” after “Secretary”.

1974—Subsec. (a). Pub. L. 93–499 substituted “2 percent” for “10 percent”.

1958—Subsec. (c). Pub. L. 85–859 made all persons required to register under section 4412 of this title who receive wagers for or on behalf of another person without having registered under section 4412 of this title the name and place of residence of such other person liable for the tax on all such wagers received by them.

Statutory Notes and Related SubsidiariesEffective Date of 1982 Amendment

Pub. L. 97–362, title I, § 109(c)(1), Oct. 25, 1982, 96 Stat. 1731, provided that: “The amendment made by subsection (a) [amending this section] shall take effect on January 1, 1983.”

Effective Date of 1974 Amendment

Pub. L. 93–499, § 3(d)(1), Oct. 29, 1974, 88 Stat. 1551, provided that: “The amendments made by this section [enacting section 4424 and amending this section and section 4411 of this title] take effect on December 1, 1974, and shall apply only with respect to wagers placed on or after such date.”

Effective Date of 1958 Amendment

Pub. L. 85–859, title I, § 151(b), Sept. 2, 1958, 72 Stat. 1304, provided that: “The amendment made by subsection (a) [amending this section] shall apply with respect to wagers received after the date of the enactment of this Act [Sept. 2, 1958].”

Notes of Decisions

Cited in 204 cases (1 in the last 5 years), 1956–2025 · leading case: Grosso v. United States, 390 U.S. 62 (1968).

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Grosso v. United States, 390 U.S. 62 (1968). · cites it 8× “Petitioner was convicted in the United States District Court for the Western District of Pennsylvania of 15 counts of willful failure to pay the excise tax imposed on wagering by 26 U. S. C. § 4401 , four counts of willful failure to pay the special occupational tax imposed by…”

United States v. Janis, 428 U.S. 433 (1976). · cites it 4× “Based exclusively upon its examination of the evidence so obtained by the Los Angeles police, the Internal Revenue Service made an assessment jointly against respondent and Levine for wagering taxes, under § 4401 of the Internal Revenue Code of 1954, 26 U. S. C. § 4401 , in the…”

MacKey v. United States, 401 U.S. 667 (1971). · cites it 6× “A summary exhibit prepared from these returns and petitioner's income tax returns were also introduced, and an Internal Revenue Service technical advisor testified that for the years in question the totals of the gross amount of wagers reported on the wagering tax returns, less…”

Chickasaw Nation v. United States, 534 U.S. 84 (2001). · cites it 2× “, 26 U. S. C. § 4401 (a) (1994 ed.) (imposing 0.”

Chickasaw Nation v. United States, 208 F.3d 871 (10th Cir. 2000). · cites it 4× “The Nation alleges that these taxes were unlawfully assessed against its pull-tab gaming activities pursuant to 26 U.S.C. §§ 4401 and 4411. We exercise jurisdiction pursuant to 28 U.”

United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U.S. 213 (1996). · cites it 2× “The word "excise" appears nowhere in § 4971 (whereas, by contrast, 26 U. S. C. § 4401 explicitly states that it imposes "an excise tax").”

Leary v. United States, 395 U.S. 6 (1969). · cites it 2× “In Grosso , we held that the same considerations required that a claim of the privilege be a defense to prosecution under 26 U. S. C. § 4401 , which imposes an excise tax on proceeds from wagering.”

United States v. Threadgill, 172 F.3d 357 (5th Cir. 1999). · cites it 2× “26 U.S.C. §§ 4401 & 4411. That tax must be paid on a monthly basis, and must be reported on what is known as an IRS Form 730.”

California v. Byers, 402 U.S. 424 (1971). · cites it 2× “' The persons affected by this language are a relatively small group, many of whom are engaged in activities made unlawful by state and federal statutes.”

United States v. Freddie G. Lochamy & Anthony J. Salinas, 724 F.2d 494 (5th Cir. 1984). · cites it 5× “See 26 U.S.C. § 4401 . On appeal, Lochamy and Salinas essentially claim that the record does not support the district court’s findings that (1) they were in the business of accepting wagers as bookmakers, (2) that they jointly held a proprietary interest in the wagers allegedly…”

Joseph P. Lucia v. United States of Am., 474 F.2d 565 (5th Cir. 1973). · cites it 3× “23 In Grosso , the Court additionally held that the Fifth Amendment privilege against self-incrimination likewise prevented a prosecution for failure to pay the excise tax on wagering imposed by 26 U.S.C.A. § 4401 , the statute under which the assessment in the case at bar has…”

Harry Gordon & Geraldine Gordon, Petitioners-Appellants-Cross-Appellees v. Comm'r of Internal Revenue, Respondent-Appellee-Cross-Appellant, 572 F.2d 193 (9th Cir. 1977). · cites it 2× “The tax court permitted the Derby to accrue and deduct from 1967 income its liability under 26 U.S.C. § 4401 (a) for federal wagering excise taxes due and then unpaid on the additional amount of the 1967 wagers determined in the tax court proceedings.”

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