A new law took effect on Tuesday that will help some Pennsylvania Lottery winners spend their winnings by ensuring they pay any outstanding debts.
The law, which was enacted by Gov. Tom Wolf a year ago, applies only to those lucky enough to win a single prize of more than $2,500.
It makes it so winners who owe back state taxes will have that amount deducted from their lottery winnings, provided their appeal rights on their tax debt has expired or were exhausted.
Delinquent taxes would be deducted, though, only after any back child support is collected from the prize, which is an intercept authority given to the lottery in 1992.
Once those debts are paid, the new law directs the lottery to look into whether the prize winner has any unpaid court-ordered obligations such as court costs, fines and restitution. If so, they get deducted.
Any outstanding obligations that exceed prize amounts would leave the winner with nothing but the knowledge of knowing some of their debts have been paid.
But that's not all.
The law requires lottery officials to also make an inquiry with the Department of Human Services to determine if the prize winner is receiving public assistance and whether the prize makes them ineligible for benefits going forward.
According to an earlier news release, state Rep. Adam Harris, R-Juniata County, who sponsored this legislation, called that welfare benefit check "an important part of the bill because it is imperative that public assistance funds are available for people who truly need them. It protects those who are less fortunate and ensures the integrity of the welfare system."
The law does allow the state Department of Revenue, which oversees the lottery, the ability to assess a fee for the cost of administering this intercept program, which would be yet another deduction from the winnings.
What's more, prizes over $5,000 will have state and federal taxes withheld at the current rates. As of January of this year, those rates were 24 percent for federal income tax and 3.07 percent for state personal income tax, according to lottery officials.
Prize claimants will be notified if a debt is to be paid with their prize winnings along with information about their rights to appeal the amount with the intercepting entity.
The lottery winnings intercept has proven to be effective means for collecting back child support. Just in the past five years, lottery officials say it has resulted in the collection of nearly $666,000 in delinquent child support.
What hasn't changed about the lottery is you still have to play the lottery to win a prize but if you win a bigger prize, some winners may find it pays less than they had hoped.
An attempt to legislate personal responsibility and accountability.
Personally I thought that type of law was on the books in states that had lotteries already.
If you owe, then pay up...nothing wrong with ensuring your financial obligations are met.
This law might encourage winners to sell their winning ticket at a discount to another willing person.
^ I thought that this would reduce people playing the lottery but it makes more sense for winners to just sell them if they might be forced to pay debts or lose welfare benefits.
Over $2500? Most states take out deductions/liens when the prize is over $599.
Get the heck out of here!
So the genius in me is like Hmmmm?!
The law does allow the state Department of Revenue, which oversees the lottery, the ability to assess a fee for the cost of administering this intercept program, which would be yet another deduction from the winnings.
Good grief, they'd better give the winner a refund of that fee when the intercept team finds that the winner is not a deadbeat.
Just in the past five years, lottery officials say it has resulted in the collection of nearly $666,000 in delinquent child support.
That works out to a measly $133,200 a year. That's something like only 10 - 20 deadbeat dads a year, not nearly enough to justify charging winners a fee for this new program. If the state wants rip off lottery players even more, why not just make the prizes smaller and harder to win, like California does?
I have heard of people doing this only to find out that the person they gave the ticket to to cash owed back obligations as well and ended up with nothing.
What's more, prizes over $5,000 will have state and federal taxes withheld at the current rates.
That's a shame. I don't think local taxes used to be withheld before. That means you don't get to keep and invest that 3.07% for a while before having to pay the tax.
That started over 2 years ago: https://www.lotterypost.com/news/305216
Oh, I see. I thought the withholding part was new.
Maybe just play Pick 3 hahaha and try to win big and get only CASH
A couple of months ago we were in a casino near Indy. Guy sitting there waiting. Employees show up with paperwork for his jackpot win. They said 'Indiana law requires us to collect for back child support and you can contest this through such and such an agency'. Felt kind of embarrassed for the guy who looked late 60's; they could have pulled him into the office. We were right next to him and couldn't help but observe this.