Georgia Department of Revenue Policy Statement IT-2010-1-27

Georgia Department of Revenue

Policy Statement IT-2010-1-27

Procedures for Withholding on the Assignment of

Georgia Lottery Installment Payments

1) Purpose/Subject: This policy statement establishes the requirements and procedures

for the withholding of state income taxes upon the assignment of Georgia lottery

installment payments.

2) Effective Date: July 1, 2008

3) Supersedes: All previous documents and any oral directives in conflict herewith.

4) Authority:

a) Statutes

i) O.C.G.A. § 48-7-101

ii) O.C.G.A. § 50-27-24.1

b) Regulations

Ga. Comp. R. & Regs. § 560-7-8-.39

5) Scope: A policy statement is intended to provide procedural guidance to the general

public and Department personnel. It is a written statement issued to assist in the

administration of laws and regulations by providing procedural guidance that may be

followed in order to comply with the law. A policy statement does not have the force

or effect of law, and is not binding on the public. It is, however, binding on agency

personnel until superseded or modified by a change in statute, regulation, court

decision, or advisory opinion.

6) Definitions:

a) “Assignee” – any person or third party, other than the winner, to whom any

interest in a prize, payable in installment payments by the Georgia Lottery

Corporation, is transferred or assigned pursuant to an appropriate judicial order as

provided for in Code Section 50-27-24.1.

b) “Assignment” – the transfer of any interest in a prize, payable in installment

payments by the Georgia Lottery Corporation, to any person or third party

pursuant to an appropriate judicial order as provided for in Code Sec. 50-27-24.1.

c) “Assignor” – any person receiving a prize in installment payments from the

Georgia Lottery Corporation who assigns or transfers any interest in such prize to

any person or third party pursuant to an appropriate judicial order as provided for

in Code Section 50-27-24.1.

d) “Lottery” – any game of chance approved by the Georgia Lottery Corporation and

operated pursuant to Title 50, Chapter 27 of the Official Code of Georgia

Annotated, including, but not limited to, instant tickets, on-line games, and games

using mechanical or electronic devices but excluding pari-mutuel betting and

casino gambling as defined in Title 50, Chapter 27 of the Official Code of

Georgia Annotated.

7) Requirements:

The purpose of this policy statement is to explain how assignees of lottery winnings

should comply with the income tax withholding requirements established under

O.C.G.A. § 50-27-24.1. The statute requires that in “a voluntary assignment for

consideration made under a judicial order, the assignee shall withhold from the

purchase price to be paid to the assignor, federal and state income taxes in a manner

and amount consistent with the procedures of the Georgia Lottery Corporation and

pay such withheld taxes to the proper taxing authorities in a timely manner and

maintain and file all required records, forms and reports.” This newly enacted statute

allows a lottery winner to voluntarily assign to another party his or her right to the

lottery prize pursuant to an appropriate judicial order.

a) Provisions for Recognition of Gain by the Assignor:

For Georgia income tax purposes, the recognition of income to the lottery prize

winner on the sale of any interest in such prize shall follow the recognition of

such income per federal income tax laws, as applied and interpreted pursuant to

the computation of the taxpayer’s state income tax liability under Georgia law.

That is, if the transaction between the prize winner and the assignee is treated as

an installment sale for purposes of the Internal Revenue Code, then the prize

winner would treat the transaction as an installment sale for Georgia income tax

purposes. The recognition of income will occur in the tax years in which the

income is received.

Conversely, if the prize winner recognizes for purposes of the Internal Revenue

Code all of the proceeds of the assignment transaction in one year, then the prize

winner shall recognize the income for Georgia income tax purposes in that same

year.

b) Provisions for Withholding by the Assignee on Purchase Payment(s) Made to the

Assignor:

For purposes of withholding, the term “purchase price” shall mean the amount

paid by the assignee in consideration for the assignment, except that in the event

of an installment sale, the term “purchase price” shall mean the amount of the

installment payment made by the assignee to the assignor. The phrase “date of

the closing of the assignment transaction” shall mean the date on which the

assignee makes payment of the agreed amount to the lottery prize winner, except

that in the event of an installment sale, the “date of the closing of the assignment

transaction” means the date on which the assignee makes an installment payment

to the winner.

The assignee shall withhold an amount equal to six percent (6%) of the purchase

price of the assignment (5.75% for purchases or installment payments occurring

on or after January 1, 2019) if the total payment exceeds $5,000 or, in the event of

an installment sale, if the total payments which will be made over the life of the

installment agreement exceed $5,000. Such amount withheld shall be sent to the

Department as specified below within ten (10) days of the date of the closing of

the assignment transaction. The assignor shall then claim the withholding on their

Georgia income tax return when it is filed.

8) Procedures:

Georgia Withholding

Please follow the procedures below:

1. Withholding will be 6% of the purchase price (5.75% for purchases or

installment payments occurring on or after January 1, 2019).

2. The amount is due within 10 days of the date of the closing of the assignment

transaction.

3. Form G-2LP should be included with your payment.

Federal Withholding

Assignees of lottery assignments should consult with the Georgia Lottery Corporation

and the Internal Revenue Service regarding submission of federal withholding taxes.

Last Updated: September 19, 2018

FOR MORE INFORMATION

For more information on this subject, contact the Taxpayer Services Division at

1-877-GADOR11 (1-877-423-6711),

from 8:00 am to 4:30 pm EST, Monday through Friday, excluding holidays.

Persons with hearing or speech impairments may call our TDD number at 404-417-4302.

For forms and other information, visit our website (www.dor.ga.gov).