Fiscal Note & Local Impact Statement

126 th General Assembly of Ohio

Ohio Legislative Service Commission

77 South High Street, 9th Floor, Columbus, OH 43215-6136 ˛ Phone: (614) 466-3615

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Am. Sub. H.B. 122


October 26, 2005


As Enacted – Effective April 14, 2006


Rep. Wagoner


No —

No local cost



Prohibits the payment of lottery prizes in excess of $599 unless the beneficial owner's information is provided to the Lottery Commission; changes the procedure for the deduction of child support payments and other debts from lottery prize awards, and modifies the calculation of income tax withholding for certain lottery prize award payments


State Fiscal Highlights


·        The bill increases the income tax withholding percentage on the transfers of prize award payments.  However, the fiscal effect on state revenues is expected to be minimal.

Local Fiscal Highlights


·        No direct fiscal effect on political subdivisions.



Detailed Fiscal Analysis


Disclosure of prizewinner information to the Ohio Lottery


The bill prohibits any lottery prize award with a value that exceeds $599 from being claimed by or paid to any person until the name, address, and social security number of each beneficial owner of the prize award are disclosed to the Ohio Lottery Commission.  "Person" means, as generally defined for purposes of the Ohio Revised Code, an individual, corporation, estate, trust, partnership, or any association.  A beneficial owner is the ultimate recipient or, if there is more than one, each ultimate recipient of a lottery prize award. 


Payment of debts owed by a prizewinner


Under current law, the Ohio Lottery Commission is required to collect all outstanding child support, spousal support, and other debt owed to the state by a lottery prizewinner.  The bill specifies that a child support enforcement agency shall issue an intercept directive to the Ohio Lottery Commission if a recipient of a lottery prize award is subject to a determination of child support default.  The bill requires the Ohio Lottery Commission to transmit to the Office of Child Support in the Department of Job and Family Services the proceeds of the prize award to pay for the arrearage owed by the prizewinner.


Methods of payment of prize awards


The bill specifies the methods by which lottery payments are made.  Specifically, those payments must be made by check to the winner's address in the United States, electronic funds transfers to an established bank located in the United States, or the winner may pick up the payment at an office of the Lottery Commission.  


Payment of the prize awards


The bill prescribes when a prizewinner’s right to a prize award is assignable.  The bill requires the Ohio Lottery Commission, if the prize award is assigned or if the winner is a debtor, to deduct and pay from available amounts of the unpaid prize award any garnishment, attachment, withholdings, other debts, or deductions pursuant to the order of a court of competent jurisdiction located in Ohio to which the Ohio Lottery Commission is named a party.  The process would apply whether the prize award is distributed as a lump sum payment or installments.  The remaining prize awards must be at least $100,000, except in situations described in the bill, e.g., child or spousal support, and the bill specifies the procedures and the order in which the Ohio Lottery Commission makes the payments for the various debts.  The bill discharges the Ohio Lottery Commission (upon making payments from a lottery prize to satisfy debts as required by law) of all further liability for payments to the lottery winner or the creditors. 


Income tax withholding on transfers of prize awards


The bill increases from three and one half to 6% the income tax withholding percentage on the gross amount payable to each prizewinner who transfers the payment award to another person.  Also, in subsequent (or secondary) transfers, each transferee shall deduct and withhold from each amount payable to a transferor that is not a prizewinner 6% of the portion of the payment representing gain or income the transferor will recognize in connection with the payment.  The transferor shall prepare a written statement describing the computation of recognized gain or income on which the tax withholding is calculated and deliver such statement to both the transferee and the Tax Commissioner.  The increase in income tax withholding from the initial transfer of payment of the prize award and the income tax withholding from recognized gain on potential subsequent transfers of payment awards largely eliminates a potential revenue loss from transactions involving multiple transfers of prize award payments.  Therefore, the bill is expected to have a minimal fiscal effect on state revenues, if any.


The bill has no local fiscal effect.



LSC fiscal staff:  Jean J. Botomogno, Economist