Ohio City Can't Collect Taxes From Mega Millions

Jan 20, 2004, 6:11 am (6 comments)

Mega Millions

Here's the latest twist in the saga of last month's $162 million Mega Millions lottery drawing.

City officials in the Cleveland suburb of South Euclid were stunned to learn that they can't collect $1.4 million in income taxes from the winner.  It seems the city charter wasn't updated to include lottery winnings as taxable income.

"It's not a good day for the city," Mayor Georgine Welo said Monday. "We were all excited until we went to go for the money and learned that we are not entitled to it. We are very saddened by the news."

Rebecca Jemison took the lump sum payment option of the $162 million jackpot, walking away with $67 million. Now, she's $1.4 million richer.

"Rebecca was excited, because she could give us the $1.4 million," Welo said. "She felt she was giving her city a very needed windfall. She wanted to give us a gift that we were not entitled to."

City Law Director Michael Lograsso said former Mayor John Kocevar's administration failed to act on a 1996 letter from the Regional Income Tax Agency advising the city to amend its charter if it wanted to tax lottery winnings.

That year, the Ohio Supreme Court ruled that in order for cities to collect the tax, they would have to specifically state "lottery winnings" as taxable income in their charters, Lograsso said.

The news came at a bad time for South Euclid, which laid off six workers and made other cuts to help bring its $16.5 million budget down to $13 million, Welo said.

With the unexpected windfall, the city was planning to rehire some workers and improve parks and recreation programs, the mayor said.

The tax snafu was the latest plot twist in an unusually dventful lottery drawing.

Days after the Dec. 30 drawing, 40-year-old Elecia Battle of Cleveland filed a police report saying she lost the winning ticket, possibly when she dropped her purse outside a convenience store.

When Jemison came forward with the winning ticket, Battle filed a lawsuit seeking to halt any payout to the winner.

Late last week, Battle was found guilty of filing a false police report, a misdemeanor, and now faces a possible penalty of 30 days to six months in jail and a $1,000 fine.

Also last week, the Ohio Lottery Commission said the man who said he was the owner of Quick Stop Food Mart, where the winning ticket was bought, was neither the store owner nor a co-owner.

Jagdish Shah accepted the $100,000 ceremonial check and a seven-day cruise awarded to the store that sells the winning ticket. The convenience store's real owner, Kamlesh Patel, said he authorized his manager to accept the prizes.

Patel said he planned to share the $100,000 award with Shah.

Mega Millions is played in 11 states, including New Jersey.

AP

Comments

mayan27's avatarmayan27

 

  Hey guys, too many stuff are happening around here.We need to watch out.

fja's avatarfja

Unforyunatly the city in cleveland where i live had a 3 million dollar winner about 10 years ago and has updated their tax laws...Ohio sure is having trouble with winning that jackpot!

RJOh's avatarRJOh

You would think a mayor would know the the tax laws of his/her community.  Too many politicians don't know or care about the laws and the limitations of their authority when it comes to taking other people money or property. 

RJOh

Lotto Czar's avatarLotto Czar

Wah, Wah, Wah.  Gee did the City fathers ever bite the hand that feeds them.  Here in Pa. Lottery winnings are exempt from State Income and Local Wage (unearned) taxes.  Now if Ms. Jammeson is smart, she can make a charitable Donation to the City, and write that off of her Federal Income tax.  No one gets hurt and everyone wins.

First a fake winner, and then a fake store owner claiming reward?  This is turning into a regular soap opera, ala the Jack Whitaker/W.Va. Powerball story.  Can't wait to stay tuned for more.

Todd's avatarTodd

Would a donation to the city be classified as a "charitable donation" for tax purposes?

BabyJC's avatarBabyJC

Being from the state known as "Taxachusetts", all I can say is, that's terrific news for the winner!

End of comments
Subscribe to this news story