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


August 1, 2005


As Passed by the Senate


Rep. Wagoner



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 to a judgment creditor


The bill also requires the Ohio Lottery Commission, if the winner is a judgment debtor in a court case, to deduct and pay the judgment creditor from available amounts of the unpaid prize award. Upon request of a judgment creditor and receipt of a certified copy of the entry of a final nonappealable judgment of a court against a debtor who is also a prizewinner, the Director of the Lottery Commission shall deduct and pay to the judgment creditors available amounts of the unpaid prize awards. 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 and the bill specifies the procedures for making the payments to the judgment creditor (or creditors). The bill discharges the 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 judgment creditor. The bill also allows the Lottery Commission to establish and charge a fee to the judgment creditor for the costs incurred for paying the creditor.


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