A Grand Prize winner shall receive a “Withholding Taxes Paid Prize”. “Withholding Taxes Paid Prizes” mean prizes where the Party Lottery pays the prize winner a net prize amount, that consists of the Party Lottery reducing the “gross prize value” by the required federal and jurisdictional withholding taxes (if any), and withholding and depositing on behalf of the prize winner the required federal and jurisdictional withholding taxes (if any) on the “gross prize value” and the Party Lottery paying the prize winner the residual amount (subject to any setoff requirements). Grand Prize winners will receive a Withholding Taxes Paid prize determined after deducting all applicable withholding taxes regardless of the “Advertised Grand Prize Amount”, and which may be higher or lower than the “Advertised Grand Prize amount.
Federal and jurisdictional withholding tax rates are subject to change and will be determined at the time the prize is awarded.
The “Withholding Taxes Paid” prize amount reported to the federal and jurisdictional revenue authorities by the Party Lottery as subject to income taxation shall reflect the amount paid to the prize winner and also the amount remitted as withholding taxes to the federal and jurisdictional authorities (if any) on behalf of the prize winner.
The Party Lottery and MUSL are not responsible for additional income or other taxes applicable in excess of the amount withheld and remitted by the Party Lottery that may be due when the prizewinner files all tax returns for the year the prize is claimed; Prizewinners should verify personal tax liability with a financial adviser.
For example, if a single Grand Prize winner wins the “Advertised Grand Prize” of $2,000,000.00 that has a gross prize value of $3,050,000.00, and the federal withholding tax rate is 25% and the jurisdictional withholding tax rate is 6%, the Party Lottery will withhold and remit $762,500.00 in federal tax withholding, $183,000.00 in jurisdictional tax withholding and pay the prize winner $2,104,500.00 in a single cash prize payment (subject to any setoff requirements); at the end of the tax year the Party Lottery will communicate to the prizewinner a W-2G Form showing prize won of $3,050,000.00.