N.J. Lottery goes from zero to highest tax rate in the USA

Jul 2, 2009, 11:40 pm (63 comments)

New Jersey Lottery

Adding insult to injury, 11% taxes are retroactive back to Jan. 1

Local Mega Millions winner calls it "Pathetic money grab", as feel-good story about workers' winning jackpot is transformed into an example of oppressive government that finds it easier to take from a few lucky winners than to stop wasteful government handouts and spending.

The limits of luck are becoming clear to Lynn Sellari, whose Cash 5 lottery ticket left her with a windfall of money in May.

Over the past few days, Sellari and hundreds of other recent lottery winners — including 10 Chubb Insurance workers who scored one of the state's largest jackpots among them — have learned about a little-mentioned detail tucked within a package of new taxes lawmakers created to help relieve the state's budget troubles.

Along with liquor, cigarettes and wine, New Jersey will begin taxing lottery winnings to generate revenue to help the cash-strapped government, with a maximum rate of almost 11 percent. The law took effect July 1, but there's a special provision when it comes to the lottery: it taxes winners going back to the start of the year.

"It isn't fair," said Sellari, who won $425,855. "It infuriates me how they can pull it off in the middle of the year."

Sellari, 61, said the federal government immediately reduced her windfall by as much as 25 percent, so the idea of paying more to the state made her and her husband bristle. "It's not that I'm ungrateful, but it makes winning bittersweet," said Sellari, who lives in Nutley.

In New Jersey, lottery winners have never paid state taxes on their prizes, which the Treasury Department is quick to point out in its rationale for collecting them now.

"We were one of the few states that did not tax winnings," Treasury spokesman Tom Bell said. "We're facing historic shortfalls in revenue. We had to look for solutions."

Only prizes of more than $10,000 will be taxed under the law. The tax rate will range from 1.4 percent up to as much as 10.8 percent, depending on the total amount of the payout plus the usual tax line items, such as the winner's other income and marital status. State officials expect to generate about $8 million through the new tax, Bell said.

Peter Harrington, whose wife collected $14 million along with nine of her co-workers at Chubb's Whitehouse Station offices, said he believes the group's $216 million Mega Millions jackpot — the second largest in the New Jersey lottery history — was the reason lawmakers made the law retroactive.

"Someone explain to me how that's not a pathetic money grab,'' said Harrington, who lives in Bay Head. "They saw this pot of money and they wanted it to be part of the 2010 budget. It's wrong."

Harrington, who runs a paint and wallcovering business, learned about the tax the day after the law went into effect when his accountant, Gail Rosen of Martinsville, called him.

"They were the first ones I thought of,'' Rosen said.

Many recent lottery winners were astonished to hear about the retroactive nature of the tax even if they knew about the state's intentions of taxing winnings.

"Well, that's not good," said Gary Resnick who won just over $100,000 in a Cash 5 game in March. "I thought it was effective on people who won after July 1.''

Two of the bill's sponsors, Sen. Barbara Buono (D-Middlesex) and Assemblywoman Bonnie Watson Coleman (D-Mercer) did not return calls asking about the retroactive nature of the tax. Assemblyman Louis Greenwald (D-Camden) who chairs the assembly's budget committee, also did not respond to questions left with an aide about the tax.

It's also unclear whether the new tax would affect past lottery winners who are collecting their winnings in installments, as compared to a lump sum. A spokesman for the Treasury Department said that would be up to the state Division of Taxation, which is still interpreting the law.

Some regular players predicted the lottery might see a drop in participation as a result of the new tax, and others vowed the retroactive tax would have political implications on lawmakers, including Gov. Jon Corzine.

Chris Percevault, who cashed an Instant Game ticket and collected a $75,000 prize in April, said many people played New Jersey's lottery because they knew they would not have to pay state taxes on the winnings.

"They're better off taxing the tickets before they're sold," the Pompton Lakes resident said. "Then it's like (the tax on) liquor. If you want to play the lottery, you pay the tax. Don't kill the winner."

The sentiment was shared by others who were suddenly feeling penalized for their lucky break.

"This was luck,'' Harrington fumed, "and I'm supposed to contribute disporportionately because of luck."

Thanks to LckyLary for the tip.

Star-Ledger

Comments

Todd's avatarTodd

I am utterly sickened by this. No Nod

Rocket 455's avatarRocket 455

 I concur. It would be different if taxation bought the working stiffs some representation... Hide your gold.

 "They're better off taxing the tickets before they're sold," the Pompton Lakes resident said. "Then it's like (the tax on) liquor. If you want to play the lottery, you pay the tax. Don't kill the winner."

 Ummm... no. The lottery is basically a tax on the working class already... jebus man. When they start taxing your taxes things have truly taken a turn for the worse. Hey I've got an idea, cut lawmakers salaries in half and take away their healthcare. They can visit the emergency rooms like the rest of us.

 Peace Hippy

SpanaUnlimited

Obviously the government has the right to tax but IMHO this is going overboard.

However I am curious on the legality of the "retroactive" nature of this law.  Does it really hold legal mustard? I had always thought ex post facto laws was unconstitutional in the United States.  Article I Section 9 to be more specific.  You can't punish folks for things that happen BEFORE the law was passed.

As I mentioned in the NH thread.   If I were NJ citizens depending on their situation I would purchase tickets elsewhere and MOVE to the lower tax state once they know they won a big prize.

Rocket 455's avatarRocket 455

Quote: Originally posted by SpanaUnlimited on Jul 3, 2009

Obviously the government has the right to tax but IMHO this is going overboard.

However I am curious on the legality of the "retroactive" nature of this law.  Does it really hold legal mustard? I had always thought ex post facto laws was unconstitutional in the United States.  Article I Section 9 to be more specific.  You can't punish folks for things that happen BEFORE the law was passed.

As I mentioned in the NH thread.   If I were NJ citizens depending on their situation I would purchase tickets elsewhere and MOVE to the lower tax state once they know they won a big prize.

 If it doesn't hold legal mustard they'll make a retroactive law that makes it legal... lol... you know the score these days. Constitution? lol again...

 You have the right idea... just close the wallet.

KY Floyd's avatarKY Floyd

Quote: Originally posted by SpanaUnlimited on Jul 3, 2009

Obviously the government has the right to tax but IMHO this is going overboard.

However I am curious on the legality of the "retroactive" nature of this law.  Does it really hold legal mustard? I had always thought ex post facto laws was unconstitutional in the United States.  Article I Section 9 to be more specific.  You can't punish folks for things that happen BEFORE the law was passed.

As I mentioned in the NH thread.   If I were NJ citizens depending on their situation I would purchase tickets elsewhere and MOVE to the lower tax state once they know they won a big prize.

First the easy one. Mmoving after you win will not change your tax liability. It's possible that a few states don't cover the situation (though I doubt it), but you can expect that the tax laws have already covered that in two ways. Your tax obligation arises when you have "constructive possession", which generally means when you become entitled to the money. Online games are easy. If you have the right numbers your ticket becomes a winner as soon as the drawing is held, and at that moment you become entitled to the prize. If you win near the end of the year you might be able to claim the winnings as taxable in the following year, because they may take a few weeks to pay you, or you may have 60 days to decide on cash or annuity. In the case of a scratcher it's likely to depend on whether or not the state knows when the ticket was sold. They may not know exactly, but they'll know when a roll of tickets is started, and they'll know when any other winners from the roll are presented. Unless you can convince a judge that your winning ticket somehow sat in the store for an extended period before you bought it, the state will know when you bought it with only a small margin of doubt. Other than possibly delaying taxes until the following year, when you bought the ticket won't matter, anyway. Even if you were clearly a non-resident at the time of purchase, the state is still entitled to impose an income tax on earnings from that state. There's no getting around that one.

As for the legality of a retroactive law, the ex post facto clause covers the criminalization of previously legal activities. If you engage in an activity while it is legal and that activity later becomes illegal, you can't be punished just because it is illegal now.  Regardless of how punishing you might think taxes are, they aren't punishment for a criminal act, and the ex post facto clause doesn't apply to taxes. There is specific case law that has held that retroactive tax laws aren't unconstitutional. OTOH, that doesn't guarantee that every retroactive tax will survive a legal challenge.  I would argue that a state that offers lottery prizes that are tax exempt has a contract with all players that spells out what the after tax prize will be. All sensible players will weigh the risk against the reward, and both are necessary terms of the contract. The risk is the cost of the ticket and th eodds against winning. The reward is the net amount  you may win. If you accepted the state's offer to buy a ticket that offered the chance to win 1 million dollars, less only the federal taxes, the state is contractually obligated to give you that net prize. Considering that there are at least 14 winners with a potential tax liability of about 850k each, I'm sure we can expect to see a significant legal challenge to the law.

petergrfn

Just wait....States are basicly broke and looking for any cash to plunder.  Anything you have or buy they want to tax it....Soda, Cigarettes, Beer......Just wait they will get creative your Taxes and Mine are going sky high....They have to make up the money some how after blowing Billions on "Stimulus" and "Tarp".    Would have been better off giving away a few hundred thou to some lucky folks and having them stimulate the econ and buisnesses.......The way the Gov't looks at it is all your money is theirs to begin with and anything they LET you keep is charity.....

SpanaUnlimited

Quote: Originally posted by KY Floyd on Jul 3, 2009

First the easy one. Mmoving after you win will not change your tax liability. It's possible that a few states don't cover the situation (though I doubt it), but you can expect that the tax laws have already covered that in two ways. Your tax obligation arises when you have "constructive possession", which generally means when you become entitled to the money. Online games are easy. If you have the right numbers your ticket becomes a winner as soon as the drawing is held, and at that moment you become entitled to the prize. If you win near the end of the year you might be able to claim the winnings as taxable in the following year, because they may take a few weeks to pay you, or you may have 60 days to decide on cash or annuity. In the case of a scratcher it's likely to depend on whether or not the state knows when the ticket was sold. They may not know exactly, but they'll know when a roll of tickets is started, and they'll know when any other winners from the roll are presented. Unless you can convince a judge that your winning ticket somehow sat in the store for an extended period before you bought it, the state will know when you bought it with only a small margin of doubt. Other than possibly delaying taxes until the following year, when you bought the ticket won't matter, anyway. Even if you were clearly a non-resident at the time of purchase, the state is still entitled to impose an income tax on earnings from that state. There's no getting around that one.

As for the legality of a retroactive law, the ex post facto clause covers the criminalization of previously legal activities. If you engage in an activity while it is legal and that activity later becomes illegal, you can't be punished just because it is illegal now.  Regardless of how punishing you might think taxes are, they aren't punishment for a criminal act, and the ex post facto clause doesn't apply to taxes. There is specific case law that has held that retroactive tax laws aren't unconstitutional. OTOH, that doesn't guarantee that every retroactive tax will survive a legal challenge.  I would argue that a state that offers lottery prizes that are tax exempt has a contract with all players that spells out what the after tax prize will be. All sensible players will weigh the risk against the reward, and both are necessary terms of the contract. The risk is the cost of the ticket and th eodds against winning. The reward is the net amount  you may win. If you accepted the state's offer to buy a ticket that offered the chance to win 1 million dollars, less only the federal taxes, the state is contractually obligated to give you that net prize. Considering that there are at least 14 winners with a potential tax liability of about 850k each, I'm sure we can expect to see a significant legal challenge to the law.

When you mention "constructive possession"----isn't that open to interpretation.   In the news you hear of people who buy tickets and then stash them in a shoe box and sometimes they wait until the last minute to cash it in.   Also if you look at the back of your lottery ticket it clearly states it is NOT valid until signed and verified by lottery officials. As long as you don't sign it or post a claim at lottery HQ...isn't the ticket simply a piece of paper you bought for $1.   It isn't really worth millions---technically---until you sign it and visit the folks at lottery HQ who verify it.

Also don't the IRS and state taxation/revenue departments depend on the 1099-G to confirm that a taxpayer is required to pay taxes?

Using my prior example:   If I were to move to another Maine and claim residency in that state to get away from NH.....does the lottery headquarters have any way to prove you are avoiding a tax in another state?   If you buy a ticket in MAINE and then move and establish residency in MAINE and wait 8-12 months before making your claim won't that make it difficult for NH to track you or tax you.  Especially if the timespan crosses over different fiscal yrs.      Your DL license and physical address at the time you claim at lottery HQ will state you are from Maine.  Also since you purchased the ticket in Maine.   How would the lottery HQ folks know that you lived in NH a yr ago and how will they know to send a 1099 to the folks in NH?     Aren't 1099s only issued to the IRS and to the state you purchased the ticket/state you live.

I guess it all goes back to "constructive possession".   Is "constructive possession" when you purchase the ticket bearing instrument.  Is "contructive possession" when the ticket becomes a winner.   Is "contructive possession" when the winner actual claims the ticket and associated assets.  Is "constructive possession" when the winner realizes his ticket is a winner?    Once again keep in mind the shoebox analogy.   People are notorious for stashing tickets in a shoebox and waiting until the last minute to verify it.   Often people don't realize they have a winning ticket until days before the deadline.

ronki

Vote them all out see how they like that .   bunch of A-holes

MADDOG10's avatarMADDOG10

This is how The politicians especially Democrats operate. They stay under the radar by sponsoring bills such as this,  to stay corrupt without being in the limelight. Now is the time to show how corrupt they really are. Wake up people.....!

Truly pathetic...!!!!!! 

diamondpalace's avatardiamondpalace

I miss seeing riots.

markp1950

I don't know if you would call it "retroactive". Taxes for this year are paid for this year. All of this years taxes are subject to change.   Now if they tried to change laws for payments in 2008, now THAT would be wrong. Of course anybody who took their winnings in 25 or 30 payments in previous year would have to pay this year. All the more reason to take it in one lump sum and get to a true tax free state like Wyoming or Texas. 

I really don't think that too many people will feel sorry for lottery winners. If they spent all their money this year it could be hard.

If they had a real tax advisor, the advisor should have told them to keep money to the side "just in case".

The article did say that they saw it coming.

So when I win big money this year, I will get out of the state before the end of the year.

MarkP

dopey7719's avatardopey7719

At first I thought this article was some kind of joke.  I cannot believe this....and I live in South Carolina where being taxed on everything is a way of life. 

This "retroactive" thing is what REALLY sucks.  These lawmakers are nothing more than snake oil salesmen.  Those that won before July should band together and sue the state! 

This is just disgusting.....it's like giving a child a present and then once he opens it telling him he has to give some of it back. 

What about the poor souls that have already spent all of their money?  What are they going to do?  Start garnishing their wages for back taxes??????????

jojosurf's avatarjojosurf

first of of all players put the money in a poo for lottery  and they are taxed on that money when they earn it if they win money  it comes from pool of all players and lottery should not be taxed especially at that rate don't play for a week buy your tickets in other states same thing happened to your casino's now they are hurting from competion my opinion only

markp1950

One other thing. Save your losing tickets!

You get to deduct your loses from your income.

I wiped out $1,600 in taxes in '05 by showing loses.

And wiped out a big bunch of my takes when I won $10K in PB in '06.

That is because it took loses to get the income.

MarkP

dopey7719's avatardopey7719

Quote: Originally posted by markp1950 on Jul 3, 2009

One other thing. Save your losing tickets!

You get to deduct your loses from your income.

I wiped out $1,600 in taxes in '05 by showing loses.

And wiped out a big bunch of my takes when I won $10K in PB in '06.

That is because it took loses to get the income.

MarkP

I thought of doing that but I'm too afraid to see how much money I actually spent in a year on the lottery....seeing that total may just make me pass out!!!

Raven62's avatarRaven62

Quote: Originally posted by Todd on Jul 2, 2009

I am utterly sickened by this. No Nod

So much for Responsible Government and Self-Serving Polititians!

politic: characterized by policy; sagacious or prudent

sagacious: having or showing keen perception or discernment and sound judgment

Time for a Change: Vote the Current Group Out: Maybe the next Group Will Be Better!

rcbbuckeye's avatarrcbbuckeye

Quote: Originally posted by Todd on Jul 2, 2009

I am utterly sickened by this. No Nod

Noticed that 2 of the bill's sponsors are Dems. A lesson to everyone. If you vote for politicians that like to take your money, you will get politicians that like to take your money. Todd, I think you would agree this is the kind of "change" that people unwittingly voted for and now everyone is going to pay dearly.

I truly feel sorry for those that live in NJ.

NY216

Quote: Originally posted by MADDOG10 on Jul 3, 2009

This is how The politicians especially Democrats operate. They stay under the radar by sponsoring bills such as this,  to stay corrupt without being in the limelight. Now is the time to show how corrupt they really are. Wake up people.....!

Truly pathetic...!!!!!! 

Yes, because Republicans are so much better. Roll Eyes

MaddMike51

Quote: Originally posted by rcbbuckeye on Jul 3, 2009

Noticed that 2 of the bill's sponsors are Dems. A lesson to everyone. If you vote for politicians that like to take your money, you will get politicians that like to take your money. Todd, I think you would agree this is the kind of "change" that people unwittingly voted for and now everyone is going to pay dearly.

I truly feel sorry for those that live in NJ.

I Agree!

I couldn't have said it better myself.Democrats are the tax & spend party.

Think's avatarThink

"We were one of the few states that did not tax winnings," Treasury spokesman Tom Bell said. "We're facing historic shortfalls in revenue. We had to look for solutions."

Translation-

We were one of the few states that did not tax winnings, Treasury spokesman Tom Bell said. We're facing historic shortfalls in revenue. We had to look for WAYS TO MAKE THOSE SHORTFALLS WORSE!

"Only prizes of more than $10,000 will be taxed under the law. The tax rate will range from 1.4 percent up to as much as 10.8 percent, depending on the total amount of the payout plus the usual tax line items, such as the winner's other income and marital status. State officials expect to generate about $8 million through the new tax, Bell said."

Tanslation-

State officials expect to lose more in lottery sales than the gain generated by about $8 million through the new tax.

"Some regular players predicted the lottery might see a drop in participation as a result of the new tax, and others vowed the retroactive tax would have political implications on lawmakers, including Gov. Jon Corzine."

Translation-

Go ahead, vote us out!  We don't want to govern over this mess anyway and this is an easy way to get out of office.  If you people knew how totally screwed we really are you would be stashing money in your mattresses right now instead of reading this!

"An unlimited power to tax involves, necessarily, a power to destroy,"
                                                                                         Daniel Webster

Todd's avatarTodd

@LotteryGuy:  I see you deleted your post, but I just thought I'd mention that federal taxes are the same for all states.  The only difference is with the state portion of taxes.  Also, in some cases, such as New York City, there are additional local taxes, on top of the state and federal taxes.  Even so, the new N.J. taxes exceed those.

LotteryGuy's avatarLotteryGuy

Quote: Originally posted by Todd on Jul 3, 2009

@LotteryGuy:  I see you deleted your post, but I just thought I'd mention that federal taxes are the same for all states.  The only difference is with the state portion of taxes.  Also, in some cases, such as New York City, there are additional local taxes, on top of the state and federal taxes.  Even so, the new N.J. taxes exceed those.

Todd, yes I had deleted my post because I was initially confused thinking "we have 31% tax in Ohio" and then I finally realized that this is a State tax of which ours is 6% "currently".  So, let me get this straight....with federal and state tax, then winners will be paying 25% federal and 11% state?  Making the total tax 36%?!  If that's the case, that is ridiculous.  Of course, in Ohio anything won above $599.00 you have to pay a total of 31%, which I think is horrible.

JONNIE

Throw em all the hell out!!! Now they expect lottery winners to bail out their screw ups!!! This is an outrage. NJ is already one of the most expensive states in the country to live in with basically the highest property taxes in the nation wth no rebates this yr thanks to this fu-- Corzine. Now if u actually win the lottery, it would have to be a really high jackpot to secure any financial freedom withthis 11% crap. BS!!!!

SpanaUnlimited

Quote: Originally posted by LotteryGuy on Jul 3, 2009

Todd, yes I had deleted my post because I was initially confused thinking "we have 31% tax in Ohio" and then I finally realized that this is a State tax of which ours is 6% "currently".  So, let me get this straight....with federal and state tax, then winners will be paying 25% federal and 11% state?  Making the total tax 36%?!  If that's the case, that is ridiculous.  Of course, in Ohio anything won above $599.00 you have to pay a total of 31%, which I think is horrible.

I don't want to scare you.   But the numbers you posted are just the taxes being withheld.   When it comes to the feds and filing taxes in April.....the tax for the yr can be as high as 35%.    Add on the state tax.....and if you live in NH or NJ....that is almost half of your money gone.

DC81's avatarDC81

Geez, it looks like they wanted to one up New Hampshire.....

Either way, politicians suck.

jarasan's avatarjarasan

Is NJ Democratic?

johnph77's avatarjohnph77

Somehow lost in the numerous posts in this thread is the fact that the state is already taking out about 50% of the money wagered as a house edge. Now they want more.

RJOh's avatarRJOh

Quote: Originally posted by LotteryGuy on Jul 3, 2009

Todd, yes I had deleted my post because I was initially confused thinking "we have 31% tax in Ohio" and then I finally realized that this is a State tax of which ours is 6% "currently".  So, let me get this straight....with federal and state tax, then winners will be paying 25% federal and 11% state?  Making the total tax 36%?!  If that's the case, that is ridiculous.  Of course, in Ohio anything won above $599.00 you have to pay a total of 31%, which I think is horrible.

Ohio treat lottery winnings like regular income and taxes it using the same rates.  Until recently New Jersey was one of only four MegaMillions states that didn't do that.  California, Texas and Washington still don't but with California having budget problems I bet they are the next to change the rule.  From what I've read New Jersey was already taxing regular income over $500K at 8.9% so they could have accomplished almost the same results by treating lottery winnings as regular income as Ohio does and they probably would have gotten a better response especially from people already paying state taxes on incomes of $500K+.  Plus New Yorkers who might have brought their MM tickets in New Jersey because it was easier won't now.

Coin Toss's avatarCoin Toss

We really need to copy other countries (on both the Federal and State levels) and have no taxes on gambling winnings.

If NJ did this after seeing NH's 10% tax kick in, it didn't take long at all, did it?

Look for all the other states with lotteries to folow suit, this will be just like one of those domino set-ups.

PERDUE

Mad                                                                          Mad                                                                   Mad

 

Mad                                                                           Mad                                                                   Mad

Mad                                                                          Mad                                                                  Mad 

Can anyone say GREED!!! Budget my AZZ!!! This is pure unvarnished GREED!!! Vote the greedy <snip>s out the first chance you get!! When election time roll around don't conviently forget what these greedy politicians did. It's not like they received a pay cut or reduced the use of unnecessary items in all of their departments. It's not like they (politicians) started paying for their business trips out of their pockets. These fat cats are getting too fat. Time to put the pudgy <snip>s on a lean mean diet!!! Get their names now so when they begin to run for their positions again, you can remind the voters that these greedy boogers voted to help themselves to their winnings and how they sneaked in the retro part also. Print this story and hand it out to every person you know that gamble. Keep it in their face when election time come. And if the people do not vote these leeches out then they deserve to be fleeced!!! Why even bother to play the lottery if dirty dogs like these folks can come and help themselves to your kibble in the name of a friggin budget??  This is B.S. and it stinks to high heaven. God need to zap every one of these greedy <snip>s with a 32oz wart on the end of their lying noses and everytime they get it removed it grows back twice its size. The greedy hounds!!!

 

Mad                                                                              Mad                                                                              Mad

This post has been automatically changed by the Lottery Post computer system to remove inappropriate content and/or spam.

ohiopick3's avatarohiopick3

That's terrible for NJ!

KY Floyd's avatarKY Floyd

Quote: Originally posted by SpanaUnlimited on Jul 3, 2009

When you mention "constructive possession"----isn't that open to interpretation.   In the news you hear of people who buy tickets and then stash them in a shoe box and sometimes they wait until the last minute to cash it in.   Also if you look at the back of your lottery ticket it clearly states it is NOT valid until signed and verified by lottery officials. As long as you don't sign it or post a claim at lottery HQ...isn't the ticket simply a piece of paper you bought for $1.   It isn't really worth millions---technically---until you sign it and visit the folks at lottery HQ who verify it.

Also don't the IRS and state taxation/revenue departments depend on the 1099-G to confirm that a taxpayer is required to pay taxes?

Using my prior example:   If I were to move to another Maine and claim residency in that state to get away from NH.....does the lottery headquarters have any way to prove you are avoiding a tax in another state?   If you buy a ticket in MAINE and then move and establish residency in MAINE and wait 8-12 months before making your claim won't that make it difficult for NH to track you or tax you.  Especially if the timespan crosses over different fiscal yrs.      Your DL license and physical address at the time you claim at lottery HQ will state you are from Maine.  Also since you purchased the ticket in Maine.   How would the lottery HQ folks know that you lived in NH a yr ago and how will they know to send a 1099 to the folks in NH?     Aren't 1099s only issued to the IRS and to the state you purchased the ticket/state you live.

I guess it all goes back to "constructive possession".   Is "constructive possession" when you purchase the ticket bearing instrument.  Is "contructive possession" when the ticket becomes a winner.   Is "contructive possession" when the winner actual claims the ticket and associated assets.  Is "constructive possession" when the winner realizes his ticket is a winner?    Once again keep in mind the shoebox analogy.   People are notorious for stashing tickets in a shoebox and waiting until the last minute to verify it.   Often people don't realize they have a winning ticket until days before the deadline.

Constructive possession isn't any more open to interpretation than "income."  Nobody says ypu need to cash your paycheck right away, but I can't imagine you would honestly try to claim that you didn't earn the income until you actually get  around to cashing it. As I said, you may be able to put it off for up to 60 days, but other than that it's pretty much written ins tone as far as the IRS is concerned.

"As long as you don't sign it or post a claim at lottery HQ...isn't the ticket simply a piece of paper you bought for $1."

I see two possibilities here. You know that's a ridiculously stupid question, or you'd be thrilled to sell your $1 ticket for $50.

Sure, it might not be easy for NH to find out that you bought a Maine ticket while you were still a resident. I didn't say it's difficult to cheat on your taxes, I simply explained the rules. If NH does find out (and I wouldn't be at all surprised if they specifically check winners in nearby states to see if those people might be, of have been NH residents) you can expect that they'll prosecute you for tax evasion. Even if you don't go to jail you can expect  the fines and interest (and fees for a defense attorney) to make you wish you had just paid your taxes up front.

TheGameGrl's avatarTheGameGrl

Quote: Originally posted by johnph77 on Jul 3, 2009

Somehow lost in the numerous posts in this thread is the fact that the state is already taking out about 50% of the money wagered as a house edge. Now they want more.

Johnph77, Sorry others didnt catch your simple yet accurate statement. I caught it and agree that they already got there slice of the pie.

Nostrildamus's avatarNostrildamus

Quote: Originally posted by dopey7719 on Jul 3, 2009

I thought of doing that but I'm too afraid to see how much money I actually spent in a year on the lottery....seeing that total may just make me pass out!!!

I'm saving all my losing scratchers and numbers tickets and I almost have enough to wallpaper my house. :)

gy65

Just not much public compassion for lottery winners I guess!  Perhaps Geico should consider replacing "Cave Man" with "Lottery Winner" in their advertising campaign.

myturn's avatarmyturn

Maybe the residence of N.J. should vote with their pockets, and telephones, and switch to the Massachusetts lottery games, which are available out of state by subscription!

GamerMom's avatarGamerMom

I can understand them changing it but not making it RETROACTIVE.  If i win I will make sure to set aside some $$$ to pay my taxes when the time comes because my state has a state tax.  But it seems grossly unfair to say oh wait you remember that money you already spent to pay off your house and bills?  Well now you have to pay taxes on it.  What if they have none of the $$ left.  I'm talking about the people that won low tier prizes here.  If I won $10,000 it would be like a drop in the bucket so I would have already put it towards my house or credit card bills.  When tax time came around if I wasn't expecting a tax on winnings I already spent I would have no way to pay it.  I just can't believe they would make it retroactive.  Sickening.

dopey7719's avatardopey7719

Quote: Originally posted by Nostrildamus on Jul 3, 2009

I'm saving all my losing scratchers and numbers tickets and I almost have enough to wallpaper my house. :)

I'm glad to know I'm not alone. Wink

dopey7719's avatardopey7719

Quote: Originally posted by gy65 on Jul 3, 2009

Just not much public compassion for lottery winners I guess!  Perhaps Geico should consider replacing "Cave Man" with "Lottery Winner" in their advertising campaign.

Good One!!  I totally agree...and I haven't even won big....YET!!!

Dawn32's avatarDawn32

I'm so glad I moved out of NJ.

myzeus's avatarmyzeus

Quote: Originally posted by MADDOG10 on Jul 3, 2009

This is how The politicians especially Democrats operate. They stay under the radar by sponsoring bills such as this,  to stay corrupt without being in the limelight. Now is the time to show how corrupt they really are. Wake up people.....!

Truly pathetic...!!!!!! 

I would say the same about Republicans. I do believe this is something the Republicans cooked up.......a bunch of bushwhacks that need their money and those same Republicans continue to bankrupt the people...they did enough damage for the last eight years.

sheeler

I'm happy because New Jersey  have won more Jackpot than any other states. Thats good. I was  hoping something like that was gonna happen and it did. Thanks God

HiFi's avatarHiFi

sheeler, that's real mature.  i think this tax is an outrage and im considering boycotting the lottery and not buying anymore tickets.  this takes the fun out of winning.

Awinanme2

A few Republicans have used these antics as well.  Pride and Political lies don't discriminate, I'm sure we all have numerous example we could cite.!

dpoly1's avatardpoly1

Time to get rid of ALL Democrats !

 

US Flag

We are no longer constituents - we are just sources of income !

jackpotismine's avatarjackpotismine

Quote: Originally posted by dpoly1 on Jul 6, 2009

Time to get rid of ALL Democrats !

 

US Flag

We are no longer constituents - we are just sources of income !

You got to be kidding!!! You think that's the solution? You're so naive. ROFL

dpoly1's avatardpoly1

Quote: Originally posted by jackpotismine on Jul 6, 2009

You got to be kidding!!! You think that's the solution? You're so naive. ROFL

You didn't read the entire POST ................ and

It would be a great start !!!!!

You are the naive one !!!!!!

Hit With Stick

This nonsense started with FDR and developed exponentialy with Johnson's War on Taxpayers - he called the war on poverty !!!!!!!!!!

maringoman's avatarmaringoman

What the hell is going on??? is that the answer to everything now?

 tax everyone to death? I wanna see the NJ lotto sales numbers

 exactly one year from today. Admin keep us posted.

sick sick politicians foaming at the sides of their mouths

when they think of more taxes, ugh!

megamillionaire's avatarmegamillionaire

Being a New Yorker I used to envy the Jersey folks because they got to keep more of their winnings, now I pitty them because now we get to keep more. Most countries with lotteries don't tax them but the US has to be greedy, and the states even greedier. Bash

jarasan's avatarjarasan

We need a refresher here:

We are going left big time, see if you can understand why.  Democrats are leftists, Chinese communists are leftists, North Korea communists are leftists,  Hugo Chavez is leftist socialist fascist, Hitler was a leftist,  Marx was a communist leftist.

Question: What is our congress majority and Barack Obama?

Prob988

Here's the deal.    Taxes are what you pay for living in a civilized country.

The Reagn/Bush/Bush mentality is "something for nothing," sort of like winning the lottery, although there's no winnings.

Governor Cartoon has now run his state into the ground.   The cops, the prisons, the schools, the roads, the parks, the hospitals are all threatened, shut, or falling to pieces.

I live in New Jersey.   I love my state, good education for my kids, good cultural connections. wonderful parks, great cities and towns.

If you don't want to pay taxes, take your <snip> pile of putative lottery winnings - not that they're real - and move out to California.

If you get murdered by a thug they can't keep in jail, I'm sure you'll rate a news story here.

 

 

 

 

 

This post has been automatically changed by the Lottery Post computer system to remove inappropriate content and/or spam.

Todd's avatarTodd

Quote: Originally posted by Prob988 on Jul 7, 2009

Here's the deal.    Taxes are what you pay for living in a civilized country.

The Reagn/Bush/Bush mentality is "something for nothing," sort of like winning the lottery, although there's no winnings.

Governor Cartoon has now run his state into the ground.   The cops, the prisons, the schools, the roads, the parks, the hospitals are all threatened, shut, or falling to pieces.

I live in New Jersey.   I love my state, good education for my kids, good cultural connections. wonderful parks, great cities and towns.

If you don't want to pay taxes, take your <snip> pile of putative lottery winnings - not that they're real - and move out to California.

If you get murdered by a thug they can't keep in jail, I'm sure you'll rate a news story here.

 

 

 

 

 

This post has been automatically changed by the Lottery Post computer system to remove inappropriate content and/or spam.

You sound like someone who has never won a big prize, and thus never saw most of it taken away by the government.  That experience would probably alter your viewpoint.  Myself, I don't need to wait until I win to know what it would be like.  The "selfishness" and tyrannical attitude of the government, assuming they can steal from one group of people and bestow it on another, is not American.  Sorry, it's not.

Todd's avatarTodd

Quote: Originally posted by jarasan on Jul 6, 2009

We need a refresher here:

We are going left big time, see if you can understand why.  Democrats are leftists, Chinese communists are leftists, North Korea communists are leftists,  Hugo Chavez is leftist socialist fascist, Hitler was a leftist,  Marx was a communist leftist.

Question: What is our congress majority and Barack Obama?

Excellent video.

jackpotismine's avatarjackpotismine

Quote: Originally posted by dpoly1 on Jul 6, 2009

You didn't read the entire POST ................ and

It would be a great start !!!!!

You are the naive one !!!!!!

Hit With Stick

This nonsense started with FDR and developed exponentialy with Johnson's War on Taxpayers - he called the war on poverty !!!!!!!!!!

No I'm not! Yes you are! No I'm not! Yes you are! No I'm not! Yes you are!

Listen, it doesn't matter who's in charge. No party has proven to be better than the other in my humble opinion.

You're the naive one! No I'm not! You're the naive one! No I'm not! Nah,Nah,Nah, Nah, Nah, Nah!

MADDOG10's avatarMADDOG10

Definately need a refresher course. Democracy as we know it will soon choke itself and then another civil war will erupt again. This State is reallly the pits right now. They call themselves polititions and are doing what the public wants, huh, put this to a vote, and then convict them....!!!

Excellent video.....!

HiFi's avatarHiFi

Quote: Originally posted by Prob988 on Jul 7, 2009

Here's the deal.    Taxes are what you pay for living in a civilized country.

The Reagn/Bush/Bush mentality is "something for nothing," sort of like winning the lottery, although there's no winnings.

Governor Cartoon has now run his state into the ground.   The cops, the prisons, the schools, the roads, the parks, the hospitals are all threatened, shut, or falling to pieces.

I live in New Jersey.   I love my state, good education for my kids, good cultural connections. wonderful parks, great cities and towns.

If you don't want to pay taxes, take your <snip> pile of putative lottery winnings - not that they're real - and move out to California.

If you get murdered by a thug they can't keep in jail, I'm sure you'll rate a news story here.

 

 

 

 

 

This post has been automatically changed by the Lottery Post computer system to remove inappropriate content and/or spam.

every bit of tax money is spent meaningfully, really?  what we need to do now is cut spending, not raise taxes.  theres so much wasteful spending going on, its more like "nothing for something".

MaddMike51

Quote: Originally posted by jarasan on Jul 6, 2009

We need a refresher here:

We are going left big time, see if you can understand why.  Democrats are leftists, Chinese communists are leftists, North Korea communists are leftists,  Hugo Chavez is leftist socialist fascist, Hitler was a leftist,  Marx was a communist leftist.

Question: What is our congress majority and Barack Obama?

Great video.It should be required viewing for every American and potential American.

Set4life's avatarSet4life

i have to agree myself, great video ! as for the taxes lol, it wont stop going up,up and away.

jarasan's avatarjarasan

Quote: Originally posted by Todd on Jul 7, 2009

Excellent video.

Credit must be given where credit is due.  Konane posted this a few weeks ago on Konane's  blog,   in a nut shell it is one of the most concise explanations to help understand the political spectrum. 

There is no doubt if one watches this excellent video they will have a better understanding of the direction USAmerica is taking.

Taxes are the life blood of a growing vampire oppressive govt..  Those taxes are demanded by the ever growing oppressive US govt.  from the very people that put them in office.  Those taxes are a bigger and bigger percentage of the fruits of labor of the people that put them in office.  The current US govt. does nothing to deserve a larger and larger portion of the peoples labor. In other words the US govt. contributes nothing that contributes to GDP or producers.  The USAmerica govt. is out of control,  the US govt. needs to be reigned in..................... ASAP.

This money grab is done at the state level but nevertheless is analogous to what the feds are doing un-checked!

Think's avatarThink

Quote: Originally posted by Todd on Jul 7, 2009

You sound like someone who has never won a big prize, and thus never saw most of it taken away by the government.  That experience would probably alter your viewpoint.  Myself, I don't need to wait until I win to know what it would be like.  The "selfishness" and tyrannical attitude of the government, assuming they can steal from one group of people and bestow it on another, is not American.  Sorry, it's not.

I have never won a big prize but I don't have to to feel that way.  Everytime I pay tax and ,lately, utility bills I feel like I am contributing money to charity as I do not get anything from all these greatRoll Eyes new programs.

Screwed by DTV switch, Screwed by cash for clunkers, Screwed by GM, Screwed by Chrysler, Screwed by the surcharges on utility bills.  I don't even want to ask how they are going to f**k up health care...and I know it wont stop there.

Anyway my point is that you no longer need to contribute to charity because you are already doing that through taxes and, in some states, through your utility bills.

When the charities come knocking tell them "I gave at the IRS. The government has my money so go get it from them".

KY Floyd's avatarKY Floyd

Quote: Originally posted by Todd on Jul 7, 2009

You sound like someone who has never won a big prize, and thus never saw most of it taken away by the government.  That experience would probably alter your viewpoint.  Myself, I don't need to wait until I win to know what it would be like.  The "selfishness" and tyrannical attitude of the government, assuming they can steal from one group of people and bestow it on another, is not American.  Sorry, it's not.

I can hardly describe the agony of lying awake at night while my heart bleeds for those poor people who win enormous amounts of money and only get to keep 60% or more of enormous.

Seriously, anybody who's up in arms about this and isn't one of the (very few) people actually affected must not have a clue about the real impact. The way lottery prizes are structured most of the prize money in most games is reported to the IRS, but the vast majority of winners aren't reported. Here's a breakdown of what can be expected for Mega Millions.

For every 175,711,536 tickets sold we can expect:

1   jackpot winner
45   2nd place winners
255   3rd place winners

That's a total of 301 winners whose winnings will be reported and taxed.

There will also be:

11,475 4th place winners
12,750  5th place winners
208,250  6th place winners
573,751  7th place winners
1,249,460 8th place winners
2,349,084 9th place winners 

That's a total  of 4,404,770 winners whose winnings won't be reported. As a practical matter that means that their winnings won't be taxed.

The 301 who will be paying taxes represent 0.00684% (1 out of every14,620) of all winners. Of course only 1 in every 39.9 tickets wins anything at all, so the 301 who will pay taxes only represent 0.00017%, or 1 of every 583,338 players. Let's assume that you're one of the few players buying 1000 tickets every year. Statistically you're still only going to have to pay a tax once every 583 years. If that possibility actually bothers you, you just aren't thinking very clearly.

As for the attitude of the government,  whether everyone understand it or not, the government is the people, and that's the real problem. People in large groups aren't efficient, whether they're running  a city, a state, a country, or planning an office birthday party. That they have to try to keep everyone happy just makes it less efficient. The majority of our politicians are not serving their first term. Whose fault is it that the people running the show are making decisions that the voters (and of course the non-voters) don't like?

The real selfish attitude comes from the people who clamor for reduced spending but don't want any of those cuts aimed at the things they're interested in. The real selfish attitude comes from the people who think that some of their income should be tax exempt for some special reason. The real selfish attitude comes from the people who cheat (or try to cheat) on their taxes by not reporting income they know is taxable, including unreported gambling winnings. In short, the real selfish attitude comes from people, period, because it's human nature to look out for our own personal interests.

Prob988 has it exactly right. We're all in it together, and between all of us we have to pay the bills. Some of you may think some people are being asked to pay more than their share, but that's because the vast majority of you don't have to pay your own share. If they don't tax lottery winnings the vast majority of you will get to pay more of your share.

OldSchoolPa's avatarOldSchoolPa

Quote: Originally posted by MADDOG10 on Jul 3, 2009

This is how The politicians especially Democrats operate. They stay under the radar by sponsoring bills such as this,  to stay corrupt without being in the limelight. Now is the time to show how corrupt they really are. Wake up people.....!

Truly pathetic...!!!!!! 

Yes...the nation is getting EXACTLY what it VOTED for...higher taxes all around because the Democrats rule the crown (just trying to rhyme...but with Papa Obama knighting czars in different areas, it is almost true that we now have an oligarchy).   And if you listen to all of Papa Obama's speeches, he ALWAYS emphasizes the importance of democratic rule...establishing a democracy in Iraq and Afghanistan...the successful democratic election in Ghana, etc.  Our Republic has gone to hell because of all the liberal democrats and few liberal Republicans.

Now I would like to throw my name in the hat and run for Congress...and I would PROMISE to fight ANY and ALL expansion of government...heck I would even throw my name in the hat and run for President in 2012 and I would promise to repeal EVERYTHING that Papa Obama enacted.  Would you vote for me?

OldSchoolPa's avatarOldSchoolPa

Quote: Originally posted by myzeus on Jul 4, 2009

I would say the same about Republicans. I do believe this is something the Republicans cooked up.......a bunch of bushwhacks that need their money and those same Republicans continue to bankrupt the people...they did enough damage for the last eight years.

Well if you look who sponsored this bill, it was ALL Democrats.  And the damage from the last 8 years really started under Clinton's administration...HE is the one responsible for the meltdown in the financial markets and bank failures as he is the one who repealed the provision that had prevented banks from becoming too big to fail. 

So stop parroting what Papa Obama has hypnotized into your lemmin brains...the past 8 years...the past 8 years...and actually start thinking about what has actually happened and who did what.  If America does not start THINKING for itself, we truly are going to become a bankrupt former republic controlled by China/Russia/still free Bernie Madoffs.

End of comments
Subscribe to this news story