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Treasurer eyes tax-evading Lottery winners

Massachusetts LotteryMassachusetts Lottery: Treasurer eyes tax-evading Lottery winners

Massachusetts State Treasurer Tim Cahill plans to tighten Lottery regulations following an audit report issued Wednesday that shows winners often employ suspicious ticket cashing methods to avoid paying millions of dollars in taxes.

''As a result, millions of dollars in taxes were evaded, lost and not reported that could have been used for much-needed state and municipal programs,'' state Auditor Joseph DeNucci said in his report.

DeNucci conducted the ''transition audit'' at the request of Cahill, who took office in January.

The audit called on Lottery officials to strengthen controls in order to protect public confidence in the $4.2 billion-per-year Lottery.

DeNucci questioned, as he has in prior audits, the status of Raynham Park, which is the only one of 7,300 sales agents that can cash ticket prizes of more than $600.

Under Raynham Park's contract with the state, it can cash ticket prizes up to $25,000.

Last year, 12 people made half the claims over $600 at that dog track, claiming $2.6 million in prize money. That raises suspicions that a small number of people who don't pay taxes are paying cash to buy winning tickets from legitimate players who want to avoid taxes.

DeNucci recommends changing the tax withholding threshold on winning tickets to stop the problem, and Cahill's office said they are looking into that possibility.

''It's definitely high up on our radar screen,'' Cahill spokeswoman Karen Sharma said. ''We're revisiting the specifics of the contract with the Raynham Greyhound Park. We're weighing a few options on how to move forward and address this issue.''

Raynham has enjoyed its special Lottery status for two decades. Gary Temple, Raynham's assistant general manager, said the track complies with all laws, and should be credited with providing a service to the state.

''Until recently, we cashed all tickets from around the state when the Lottery was closed,'' said Temple, adding that he's had no talks with Cahill's office, which oversees the Lottery.

The professional cashers, or ''10 percenters,'' so-called because they charge legitimate winners 10 percent of the winnings while the real winners avoid up to 30 percent in taxes should be dealt with by the Department of Revenue, Temple said.

''A 10 percenter still has to put their name and number (on a claim),'' he said. ''We comply with the rules and regulations of the law. We have to take two sets of ID. There's no dead man's ID.''

Cahill has hired an internal auditor, Sharma noted, and plans to share more information with the DOR and Internal Revenue Service. But the Lottery can only do so much, she said.

''The Lottery is not an enforcement agency. We have no legal means or ability from prdventing somebody from cashing a ticket for someone else,'' she said.

AP

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8 comments. Last comment 13 years ago by RJOh.
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fja's avatar - gnome1

United States
Member #91
January 19, 2002
11924 Posts
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Posted: September 11, 2003, 6:22 am - IP Logged

Show me a Law, and I'll show you a loophole.....

"Everybody has to believe in something...I believe I'll have another beer!"   = W.C.Fields                      

    Avatar

    United States
    Member #972
    December 30, 2002
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    Posted: September 11, 2003, 7:23 am - IP Logged

    >That raises suspicions that a small number of people who don't pay taxes are paying cash to buy winning tickets from legitimate players who want to avoid taxes.

    Can someone explain why the "people who don't pay taxes" don't pay taxes? It looks like the state has their name and information.


      United States
      Member #379
      June 5, 2002
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      Posted: September 11, 2003, 8:39 am - IP Logged

      Connecticut now withholds on virtually all wins $600 and above.

        RJOh's avatar - chipmunk
        mid-Ohio
        United States
        Member #9
        March 24, 2001
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        Posted: September 11, 2003, 6:04 pm - IP Logged

        If taxes on lottery winnings were figured the same way for everybody, then the average winner would not gain anything by selling his winning tickets to a professional gambler.  Allowing a single professional agent to legally charge 10% of the winning ticket probably is an incentive to create a crew of professional gamblers to bring in more business.  For the lottery winners that are in the 28%+ tax bracket, it can be a win, win and win deal for everybody but the tax collector. Changing the tax withholding threshold on winning tickets, won't change the way a professional gambler figures his taxes.

        RJOh

          winsumloosesum's avatar - Lottery-060.jpg
          Pennsylvania
          United States
          Member #2218
          September 1, 2003
          5387 Posts
          Online
          Posted: September 11, 2003, 6:29 pm - IP Logged

          Like we don't pay enough taxes in this country!!

          Save your loosing tickets!!!

          State shouldn't tax you for winning in your own state.  Should they!!

          Pretty soon there will be tax for buying a lottery ticket!!

          Who's making out on this deal???

            RJOh's avatar - chipmunk
            mid-Ohio
            United States
            Member #9
            March 24, 2001
            19816 Posts
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            Posted: September 11, 2003, 6:56 pm - IP Logged

            Last year I spent a little over $3100 playing lotteries and had loosing tickets to prove it.  I matched 5 of 6 in OhioSuperLotto for $1500.  I added the $1500 to my taxable income, but could only deduct as a loss the amount I won ($1500).  $1500 did not raised my listed deductions up to the standard deductions I had coming anyway, so I ended up paying ~$300 more in State and Federal taxes.  As a professional gambler, I would had paid on my profits($1500-$3100=0) rather than my gains($1500).

            I've read that some politicians have suggested taxing the price of lottery tickets, that way they can tax the losers also.

            RJOh

              luckycat's avatar - animaniacs24

              United States
              Member #1687
              June 16, 2003
              1047 Posts
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              Posted: September 11, 2003, 10:55 pm - IP Logged

              rjoh

              your the first I heard won somthing better than 50$

              do u remember how you picked the ticket??maybe u should go back and rem how u did it and maybe get the jackpot.

              cong/on your win

              more green bucks to u              and blessings too

               

                  luckycat        >>>>>>>    purr-purr--purrfect                           

                RJOh's avatar - chipmunk
                mid-Ohio
                United States
                Member #9
                March 24, 2001
                19816 Posts
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                Posted: September 12, 2003, 10:13 am - IP Logged

                luckycat,

                I do remember how I won, I got lucky.  The system I used would have rejected any combination with all 6 of the winning numbers, but include combinations that had five of the winning numbers.  I posted my system in the system sections sometime back, so I won't go into it here.  The point I was making was an average lottery player is not going to come out ahead in his taxes unless he wins more than $5K or the amount he spent on lottery tickets.

                RJOh