New lottery prize screening rule nets over $133K in overdue taxes

Some of Connecticut’s 2012 lottery winners wound up with less cash than they expected as a result of a new law aimed at delinquent taxpayers.

According to the Department of Revenue Services, the state has collected $133,208 since Jan. 1 from a new statute requiring lottery administrators to cross-reference prize winner and tax delinquency lists — and deduct any overdue taxes and penalties from winners of $5,000 or more.

Tax officials said 63 lottery winners with income tax delinquencies had their prizes reduced during the first half of 2012 — a pace that puts the state on track to recoup roughly a quarter of a million dollars by the end of the program’s first year.

“This is not only proving helpful in collecting revenue due the state, but adds a level of fairness to the tax system,” said Rep. Gerald Fox III, D-Stamford, co-chairman of the Judiciary Committee. “If someone is fortunate enough to win a lottery prize, it only makes sense that any back taxes should be taken out.”

There is currently about $400 million in state tax delinquencies.

The new prize reduction rules apply to any taxes, including penalties and interest, that are more than 30 days overdue and are not the subject of an administrative appeal pending before the DRS commissioner or before a court.

The Connecticut Lottery Corp., a quasi-public entity that administers state lottery games, is prohibited by law from disclosing any tax information that it receives.

Fox was one of the legislators who spearheaded the bill in 2011, crafting it based on a suggestion from a constituent.

According to Fox’s office, Stamford resident Anthony Martino had recommended a decade ago that lottery winnings be screened against lists of overdue child support payments. “So now I thought, why not apply the same process to delinquent taxes?” Martino said.

The 2011 legislature adopted the tax delinquency screening program unanimously in both the House and Senate.

The lottery child support collection program, launched in 2004, has collected nearly $1.5 million since that time. During the first five months of 2012, the program has brought in almost $85,000.