State retroactively slapped her with $1.58 million in taxes
ROCKAWAY, N.J. — A Rockaway, New Jersey, woman who won a $14.9 million prize in the New Jersey Lottery's Pick 6 drawing in 2009 is suing the state to get a $1.58 million income tax refund she says she is owed.
Kimberly Wearin's lawsuit, made public today in Superior Court in Morristown, says that when she won the prize on June 4, 2009 and took it as a lump sum, winnings from the state lottery were excluded from taxable income, under state law.
However, on June 29, 2009, an amendment to the law was enacted that made winnings of more than $10,000 subject to the state income tax and the law was made retroactive to Jan. 1, 2009, according to Wearin's attorney, Steven Klein.
The attorney said that Wearin paid the applicable tax in April 2010 but in June 2010, she filed an amended tax return excluding the lottery winnings from her income. The state Division of Taxation denied her amended return and also rejected an administrative appeal.
The suit names the state Department of Treasury, the state Division of Taxation and the state Lottery Division as defendants. It claims that the legal amendment taxing lottery winnings discriminates against Wearin and accuses the state of breach of contract. The suit seeks a judgment ordering the refund.
Attorney Jeff Schechter, who is part of Wearin's legal team, said she paid the tax in 2010 but then filed an amended return as part of a "conservative" strategy to avoid paying interest and penalties on the tax.
Schechter said their firm, Cole, Schotz, Meisel, Forman & Leonard of Hackensack, is pursing similar litigation on behalf of several other lottery winners affected retroactively by the 2009 amendment, including some who started being taxed in 2009 on annuities they had been paid for years.
Andy Pratt, a spokesman for the Treasury Department, said "We're not going to comment on pending litigation."
This will be an interesting case to watch.
Good. Retroactive taxes are BS.
Just TAX us to Death and then dig us up and TAX us some more . Land of the free like Hell.
They need to take this as far as the Supreme Court if necessary. Seems like to me it was a "money grab" by a cash strapped or not state. How could they make it retroactive? If they wanted it to start in Jan 2009 seems like to me someone should have gotten off their keyster and got the law passed before that time. It stinks to high heaven.
We should sue the Federal & State Governments for ALL of our income taxes !!!!!!!!!!!
The Constituson prohibits ex post facto law, laws passed after the fact which results in incarceration. This prohibition does not apply to tax laws.
Bill Clinton, early in his Administration, retroactively increased corporate and personal income tax. This law was contested all the way up to the Supreme Court. The Court ruled the Constitutional ban on ex post facto laws did not apply to tax laws. Many people and companies went bankrupt. They were on the edge and could not weather the additional taxes.
Does any one know why there is no boat building industry in America? Bill Clinton and his merry den of democrats increased the tax on boats so much that the "rich" now go to Europe for their luxury craft. John Kerry (he served in Vietnam, you know) has his built in Italy. I wonder if he ever paid the tax?
It also seems to me that it should not have been made retroactive, I can not say that they were discriminated against, but I can say that whoever made that law retroactive must be crazy, they and all others should get their tax money back and with added interest, such a thing should not be legal, it is crazy.
This isn't an ex post facto argument. The argument here is breach of contract. Since the STATE operates the lottery AND sets tax law, by passing a retroactive tax on lottery winnings it effectively violated the terms of the contract under which the tickets were sold. They were sold until June 29 with the understanding that winnings would not be taxable. In effect, the state made the tickets less valuable after they had been sold.
I wish the politicians who passed the law would have to pay it back out of their own pockets.
Blood sucking bastages.
The constitutional ban against ex post facto laws is generally held to apply only to criminal laws (making something an offense, or increasing the penalty for an offense after an act has been committed). It wouldn't apply here. But I wonder about the wording of the contract between the state and the jackpot winner. That wording could make or break this case.
I might also ask about equal protection of the law. This law seems to be very specifically targeted, and it's possible the Fourteenth Amendment might have something to say about it.
It does really depend I think on the wording of the law and its reasons for enactment. I just got through reading about a case where the Supreme Court held that retroactive taxation was legal but as I said, it depends entirely on the wording of the state law that they passed. Her reasoning would have to be under the fifth amendment to the Constitution which prohibits government abuses. According to what I read, the retroactive taxation cannot just be for reasons of raising revenue. I think that is the ONLY reason they passed that law. They figured out how much money the state was losing by not taxing lottery winnings and then they plugged the "hole" with the retroactive tax statute. Now if they passed it for other reasons besides that, they will probably win in court.
You stole my thunder.
This makes me wonder about limits of government power. The tax was made effective at the beginning of the year. If they can do that, could they make a tax effective at the beginning of the previous year? Could they make a tax retroactively effective for the past 50 years? Could they simply increase the income tax rate effective the past 50 years and expect everyone to send in the difference between what they paid and what they would have paid under the higher rates? Why would a calender date, such as January 1, affect the time during which a retroactive law can be made effective? If they can change laws in the past as far as the beginning of the year, what's to keep them from changing laws since the founding of the state?
No, they can't go that far back. There would be riots in streets. I think Jan 1 of the year the law is passed is as far as they can go back.
Why? We must question governmental power, otherwise we yield to whatever power it assumes. If they can pass a law retroactive to the beginning of the current year, then they can pass a law retroactive to the beginning of time. The fact that an income tax return has not yet been filed is meaningless. Otherwise, those who wait until April 15 to file a tax return can be subjected to a an income tax increase passed by Congress and made effective on April 14. Income must be subjected to a level of taxation effective at the time it was acquired, or it must be subject to whatever level of taxation it is subjected to at any future date. January 1 is not a magical date at which laws not currently in effect can be made to be in effect, unless lawmaking bodies have the power to make any law retroactive to any date, in which case January 1 is still not a limit.
get those <snip> .tell them that you dont mess with jersey befor snooky smack the crap out of NJL
. all they do is ripp us off when you winn and even after that they dont leave you alone. hope this case will be succesfull.
I think the interesting part of this is that the people who do these kinds of things to us are our employees - they work for us.
I think the outrageous part of this is that they keep getting re-hired, thanks mainly to a certain political party that starts with a D.
I am thinkin' that there may be riots in the streets in the future .........................
....................... too many crooks in the Government !
Makes no difference, a D or an R, if they are not doing what "We the People" want they should be voted our of office, period. I totally agree with you that many of these idiots (on both sides) get re-elected time and time again. The sad part of that is that people wonder why nothing changes, dah!
I think we can agree that the R party has been guilty from time to time over the years but "tax and spend" is the hallmark of the other guys.
Blaming them both is like frisking Swedish two year olds at the airport just to show that we're not biased. It's pure political correctness.
Let's be honest, we know who the bad guys are.
In both cases.
The thing is that Republicans do get riled up enough to get their representatives kicked out sometimes. And the Tea Party (at least a bunch of them) are there actually doing what they said they would.
But for the last year and a half, the Democratic plan has been to never touch the budget, let the Republicans do it and call them exetremists when they do. Out of 4 budget proposalsthat the Senate voted to move forward, the only one made by a Democrat was OBama's and it got 0 votes. ZERO, not a single Senator voted for it - apparently it was "non-sensical". All other 3 were proposed by Republicans.
The thing is people who support the Democratic party usually say it's both parties equally. I by no means trust the Republican party, and disagree with lots of Republicans on certain issues. But as of right now, the Repiblican party has members doing real, good work, while the only democrats doing anything is the "Gang of Six" - a bi-partisan group. But they haven't released their plan as of yet.
Yes, Todd and others, this should be an interesting case to watch. I lived in New Jersey and back then -- it was cash strapped, before the economy tanked. Oh, yeah, the Federal Government is bitching about it's overblown, bloated deficit, not caused by the taxpayers, but by the Wall Street sellouts -- the fat cats who pocketed the taxpayer's money: surely, the fat cats spent the money on wild women and song, and other mistresses.
Okay, Obama, come to the rescue: refund all taxpaying citizens and perhaps you may get re-elected. He's tried other strategies, try this one.
This has absolutely nothing to do with the constitution, the bill of rights, or general tax law. It's strictly about contract law. The state can very definitely change the income tax law and make the changes retroactive to the beginning of the year, but they can't unilaterally change the terms of a contract they've already entered into with other parties.
The legal argument here is that the state entered into a contract with millions of people to sell them lottery tickets based on known odds with known risks and rewards. The rewards were the known after-tax prizes. By trying to tax prizes that were won prior to the enactment of the law the state is unilaterally changing the terms of the contract for all those people who accepted it and risked their money on lottery tickets based on the original terms. That much should be a slam dunk, as contract law is very well settled. I expect that the state will argue that the lottery department is independent of the legislature and the revenue departments, and that the new law therefore doesn't renege on the contract made by the lottery. That may work if the lottery's well advertised inducements to enter into such contracts said that lottery prizes were tax exempt at that time, but I doubt they said that. I'd hope the court will rule that all state agencies are simply individual parts of the state and that the state as whole has to honor the contract made pursuant to New Jersey law by the lottery department. Failing that, the court should rule that the contracts with the lottery are still in full force, and that the prizes must therefore be augmented in order to offset the taxes paid to other state entities.
IRC correctly this law was announced shortly after the workers at Chubb Insurance won a cash prize of about $100 million, representing a potential $10 million in unexpected revenue for the state. I assume this woman was part of that group.
Wait a minute, let's not get carried away.
Wild women and mistresses have saved many a man from a life of despair.
Like George Jones sang:
I need four walls around me
To hold my life
To keep me from goin astray
And a Honky Tonk Angel
To hold me tight
To keep me from slippin' away-ay-ay-ayyyyyy
I agree with you. I don't see why people want to blame just the Democrats. There is alot of blame to be passed around. Kick them all out!!!
It seems like an open and shut case to me.
Tax his land, Tax his bed, Tax the table At which he's fed.
Tax his tractor, Tax his mule, Teach him taxes Are the rule.
Tax his work, Tax his pay, He works for peanuts Anyway!
Tax his cow, Tax his goat, Tax his pants, Tax his coat.
Tax his ties, Tax his shirt, Tax his work, Tax his dirt.
Tax his tobacco, Tax his drink, Tax him if he Tries to think.
Tax his cigars, Tax his beers, If he cries Tax his tears.
Tax his car, Tax his gas, Find other ways To tax his ass.
Tax all he has Then let him know That you won't be done Till he has no dough.
When he screams and hollers; Then tax him some more, Tax him till He's good and sore.
Then tax his coffin, Tax his grave, Tax the sod in Which he's laid.
Put these words Upon his tomb, Taxes drove me to my doom...'
When he's gone, Do not relax, Its time to apply The inheritance tax.
Accounts Receivable Tax
Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (currently 44.75 cents per gallon)
Gross Receipts Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate Tax
Service Charge T ax
Social Security Tax
Road Usage Tax
Sales Tax
Recreational Vehicle Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Non-recurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax