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Will the Puerto Rico Powerball winner pay Federal tax? Nobody knows

Topic closed. 29 replies. Last post 2 years ago by BellasBMWLucki.

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JoeBigLotto's avatar - Lottery-049.jpg
melbourne , florida
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Posted: February 13, 2015, 10:12 pm - IP Logged

Well I have a good idea what will happen but b4 I say it am surprised that powerball moved the game to Puerto Rico without laying down the rules on tax that is strange the tax rules should have moved to Puerto Rico b4 the game slips to even play now people are saying we not sure. Well when it comes to tax the bigger tax is considered b4 the smaller tax. Since the bigger tax is the federal tax I think the player has to pay that to continental America because this is a federal game and for state tax they may exempt him because federal tax was greater and deducted. Uncle Sam is never stupid when it comes to getting his tax money ,the federal tax is the first thing put on hold, as for what state tax does with him that is his problem now. And if anybody calls this a local income then it may be confiscated because the only local income with this much cash are drug lords lol .US Flag

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    NY
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    Posted: February 13, 2015, 11:26 pm - IP Logged

    Giving  a further thought on this issue, in my opinion, the income was not technically generated from the local economy but from the Power Ball game which is based in the states.

    Also,the people in Puerto Rico collect Federal benefits so don't see how this windfall would be " exempt income", from Federal income taxes.

    Group Hug

    The winner bought a ticket from the Puerto Rico Lottery. After coming forward and having th ticket validated they will be paid by the Puerto Rico Lottery from an account that's owned and maintained by the Puerto Rico Lottery. The other PB states will contribute their share of sales to the Puerto Rico Lottery, but won't pay a dime to the winner. The tax issues are exactly the same as they'd be if somebody earned a dividend from a Puerto Rican corporation that made money by selling  its products to people in the states. he income was earned in Puerto Rico regardless of the fact that some of the money that funds the income came from other locations.

    It's also well established that when somebody wins with a ticket that was issued by any of the states with lotteries the income is considered to originate from that state. That's why a states that sells a jackpot winning ticket gets to collect income tax even if the winner is a resident of a different state. That principle cuts both ways.

    The only mystery is whether the winner is a resident of Puerto Rico or somebody who is subject to the taxes of some other jurisdiction.

      TheGameGrl's avatar - character catafly.jpg
      A long and winding road
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      Posted: February 13, 2015, 11:34 pm - IP Logged

      The winner bought a ticket from the Puerto Rico Lottery. After coming forward and having th ticket validated they will be paid by the Puerto Rico Lottery from an account that's owned and maintained by the Puerto Rico Lottery. The other PB states will contribute their share of sales to the Puerto Rico Lottery, but won't pay a dime to the winner. The tax issues are exactly the same as they'd be if somebody earned a dividend from a Puerto Rican corporation that made money by selling  its products to people in the states. he income was earned in Puerto Rico regardless of the fact that some of the money that funds the income came from other locations.

      It's also well established that when somebody wins with a ticket that was issued by any of the states with lotteries the income is considered to originate from that state. That's why a states that sells a jackpot winning ticket gets to collect income tax even if the winner is a resident of a different state. That principle cuts both ways.

      The only mystery is whether the winner is a resident of Puerto Rico or somebody who is subject to the taxes of some other jurisdiction.

      Thank You Ky Floyd for the explanation. Makes sense.

      too many people do not understand Territory laws/regulations verses , Federal regulations.

      The Puerto R  Lottery will get its cut from the winner.....so its sorta like Uncle Sam in a way.....

      Looking forward to the winner coming forward..or do they have annonimity?

      ~~Is it true, Is it kind,Is it necessary. ~~~

       Thanks be to the giving numbers: 1621,912,119 02014

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        Posted: February 14, 2015, 12:14 am - IP Logged

        I don't know why the tax is in question, it is "black and white" so to speak, the lottery ticket was bought on Puerto Rico and if the person who owns the ticket is Puerto Rican then as the source is local, it is federal tax FREE, Why even ask anybody about it? It could not be clearer than it is.

        After all the law says so.

        Reminds me of: "Military Intelligence".

        Since when, Does the military have intelligence? I thought that they were as dumb as they come.

          FlamingoGirl's avatar - FloridaLotteryLogo2013
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          Posted: February 14, 2015, 2:18 am - IP Logged

          Wow, first time ever in PR! Hurray!

          You gotta be in it to win it! Hurray!

            dallascowboyfan's avatar - tiana the-princess-and-the-frog.jpg
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            Posted: February 14, 2015, 7:20 am - IP Logged

            I wonder if the Virgin Islands have the same tax issue?

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              fajardo
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              Posted: February 14, 2015, 9:23 am - IP Logged

              Giving  a further thought on this issue, in my opinion, the income was not technically generated from the local economy but from the Power Ball game which is based in the states.

              Also,the people in Puerto Rico collect Federal benefits so don't see how this windfall would be " exempt income", from Federal income taxes.

              Group Hug

              The USA has imposed a tariff and cabotage in P.R  , we are exempt from federal income tax but we are paying it in other ways those benefits don't come out of the goodness of the USA heart.

              The winner of the jackpot can remain anonymous if he wants to in P.R

                DoctorEw220's avatar - alien helmet.jpg
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                Posted: February 14, 2015, 10:03 am - IP Logged

                I would make the MUSL report how much each lottery put towards the jackpot, divide it by 3, and tax them only on what Puerto Rico gave, since that was income earned from within the territory.

                I've redone my website.  Go to www.dr-ew.com.  I kept a lot of the old stuff, and I've added some new stuff.  Look for more new stuff in the coming weeks.

                  Gleno's avatar - Lottery-001.jpg
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                  Posted: February 14, 2015, 10:32 am - IP Logged

                  Not for nothing, but we should have the problem of worrying about the Feds collecting their income tax from the lucky winner in Puerto Rico.

                  Maybe that's why it's  called the Rich Port.

                  Wink

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                    NY
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                    Posted: February 14, 2015, 12:03 pm - IP Logged

                    I wonder if the Virgin Islands have the same tax issue?

                    The good news: USVI residents do not file returns with, or pay taxes to the IRS. More good news: there is no USVI state income tax.

                    Bad news: USVI residents file returns with, and pay taxes to, the Virgin Islands Bureau of Internal Revenue, using the same forms and rules as those of us who file with the IRS, and they pay the same rates.

                      larry3100's avatar - larry icon2.jpg
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                      Posted: February 14, 2015, 5:21 pm - IP Logged

                      Now that someone won the Powerball in Puerto Rico, I wouldn't be surprised that the federal government would pass a law that states that anyone winning a top prize in the Powerball game, must pay federal taxes on that win, even if it's retroactive.

                        JoeBigLotto's avatar - Lottery-049.jpg
                        melbourne , florida
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                        Posted: February 15, 2015, 8:05 am - IP Logged

                        I had a dream last night and in my dream I received a solution to solve this tax problem. The solution is that the Puerto Rico winner has to pay the higher federal tax of 30percent for people that win outside continental USA but because purto Rico has exemptions the federal government will refund Puerto Rico state their 20 percent so the federal government keeps 10 percent Puerto Rico keeps 20 percent the winner keeps 70 percent this will be a new rule called a split tax system hope IRS is reading my new ideal lol. US Flag

                          DoctorEw220's avatar - alien helmet.jpg
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                          Posted: February 16, 2015, 8:57 pm - IP Logged

                          Now that someone won the Powerball in Puerto Rico, I wouldn't be surprised that the federal government would pass a law that states that anyone winning a top prize in the Powerball game, must pay federal taxes on that win, even if it's retroactive.

                          They wouldn't be able to make them pay taxes on income earned before the law would be passed.  That's in the constitution (I believe the term is "Ex Post Facto").

                          I've redone my website.  Go to www.dr-ew.com.  I kept a lot of the old stuff, and I've added some new stuff.  Look for more new stuff in the coming weeks.

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                            NY
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                            Posted: February 17, 2015, 12:58 pm - IP Logged

                            They wouldn't be able to make them pay taxes on income earned before the law would be passed.  That's in the constitution (I believe the term is "Ex Post Facto").

                            Ex post facto applies only to criminal laws. If you do something on Monday and a law makes it illegal on Tuesday you haven't committed a crime and can't be prosecuted for what you did on Monday. Similarly, if you did something that was a misdemeanor on Monday and a law that takes effect on Tuesday makes it a felony, you can only be charged (and penalized) under the old law that makes your crime a misdemeanor.

                            Several years back the state of NJ passed a law somewhere around summer that retroactively made NJ lottery prizes subject to NJ income tax as of January 1st. Somebody who won before the law was passed sued, but their legal argument is that by buying their ticket at a time when there was no state income tax on the winnings they had a contract with NJ, and the law violated the terms of the contract. If ex post facto applied they would have used that argument, since it's far more clear cut.

                            The argument in the NJ case wouldn't apply in the case of a change in federal tax law, since there's buying a state lottery ticket, with the attendant promises from the state, clearly doesn't create any contractual obligations for the federal government. Curiously, the info I've seen about PR is that it's PR's choice to be exempt, rather than the federal government choosing not to tax  PR residents. In that case, if PR decided to change the law the winner would probably have the same argument as the NJ winner: they bought the ticket based on the implicit promise that any winnings would be taxed as they were at the time the contract was made, which is when the ticket was purchased. Since in the case of the PR winner any change would affect federal taxes instead of state taxes there's perhaps a better argument that the purchase contract doesn't include a promise that federal income tax obligations won't change, even if it is up to PR to decide on any such changes.


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                              Posted: February 18, 2015, 10:06 pm - IP Logged

                              my pie, you're right.

                               

                              I've love taking a drive to see mi familia sometimes en pennsylvania,because when we win,no tax taken out in PA.,

                               

                              NJ one day feasibly might do away with that...Time will tell...

                               

                              However,i think it is so nice the P.R.familia whoever he or she is won,so "quick."

                               

                              Isn't it true P.R.just won such right to have it played there?That is nice.

                              CheersSo congrats!

                               

                              adios