[Code of Federal Regulations]
[Title 26, Volume 16]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR44.4401-2]

[Page 34-35]
 
                       TITLE 26--INTERNAL REVENUE
 
    CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY 
                               (CONTINUED)
 
PART 44_TAXES ON WAGERING; EFFECTIVE JANUARY 1, 1955--Table of Contents
 
                         Subpart B_Tax on Wagers
 
Sec. 44.4401-2  Person liable for tax.

    (a) In general. (1) Every person engaged in the business of 
accepting wagers with respect to a sports event or a contest is liable 
for the tax on any such wager accepted by him. Every person who operates 
a wagering pool or lottery conducted for profit is liable for the tax 
with respect to any wager

[[Page 35]]

or contribution placed in such pool or lottery. To be liable for the 
tax, it is not necessary that the person engaged in the business of 
accepting wagers or operating a wagering pool or lottery physically 
receive the wager or contribution. Any wager or contribution received by 
an agent or employee on behalf of such person shall be considered to 
have been accepted by and placed with such person.
    (2) Any person required to register under section 4412 by reason of 
having received wagers for or on behalf of another person, but who fails 
to register the name and place of residence of such other person 
(hereinafter in this subparagraph referred to as principal), shall be 
liable for the tax on all wagers received by him during the period in 
which he has failed to so register the name and place of residence of 
such principal. Subsequent compliance with section 4412 by the person 
receiving wagers for another does not relieve him of his liability and 
duty to pay such tax, nor will the fact that such person incurs 
liability with respect to the tax on such wagers, relieve his principal 
of liability for the tax imposed under section 4401 with respect to such 
wagers. Accordingly, both the person receiving the wagers and his 
principal shall be liable for the tax on such wagers until the tax is 
paid. Payment of the tax on such wagers shall not relieve the person 
receiving wagers of any penalty for failure to register as required by 
section 4412. This subparagraph has application only to wagers received 
after September 2, 1958.
    (b) In business of accepting wagers. A person is engaged in the 
business of accepting wagers if he makes it a practice to accept wagers 
with respect to which he assumes the risk of profit or loss depending 
upon the outcome of the event or the contest with respect to which the 
wager is accepted. It is not intended that to be engaged in the business 
of accepting wagers a person must be either so engaged to the exclusion 
of all other activities or even primarily so engaged. Thus, for example, 
an individual may be primarily engaged in business as a salesman, and 
also for the purpose of the tax be engaged in the business of accepting 
wagers.
    (c) Lay-offs. If a person engaged in the business of accepting 
wagers or conducting a lottery or betting pool for profits lays off all 
or part of the wagers placed with him with another person engaged in the 
business of accepting wagers or conducting a betting pool or lottery for 
profit, he shall, notwithstanding such lay-off, be liable for the tax on 
the wagers or contributions initially accepted by him. See Sec. 
44.6419-2 for credit and refund provisions applicable with respect to 
laid-off wagers.