The winner of the $144 million Powerball jackpot on April 8 will not be allowed to leave D.C. without forking over what’s due to the city in tax revenue. The District’s tax office tried to make certain of that.
An emergency rule published in Friday’s D.C. Register clarifies that 8.5 percent of the winning check, or checks, will be withheld
before the money is turned over to the winning D.C. resident. The reason for the change, according to explanatory language attached to the rule: “To protect the interest of the District in the event the winner relocates outside the District thereby attempting to avoid the District income or other tax…”
“The check the person gets will be minus the [Internal Revenue Service] and the D.C. withholding,” David Umansky, spokesman for the D.C. finance office, said Friday.
The still-anonymous Powerball winner may accept a single payment of $79.68 million, or 30 annuitized payments totaling $143.98 million. The District will collect $6.77 million if the winner chooses a lump sum payment, or $407,954 a year if an annuity is chosen.
Rosanne Altshuler, co-director of the D.C.-based Tax Policy Center, said the first step for the winner’s lawyer, “of course,” was to explore how to avoid paying taxes on the money.
“I think that’s exactly what the attorney would be doing and that’s what they’d expect him to do,” said Altshuler, also a senior fellow at the Urban Institute. “I’m not sure exactly how it would be done, but there’s a lot to be gained in getting them out of town.”
The winning ticket in the multistate lottery was purchased at the Giant on Alabama Avenue Southeast. Athena Hernandez, spokeswoman for the D.C. Lottery, said Friday that the money was slated to be claimed today.
“The prize is going to be claimed in the name of an entity,” Hernandez said. “That is in our rules. You can claim your winnings as an individual or an entity.”
An attorney for the winner reached out to the lottery last week. Hernandez said she did not know whether the winner was a single person or a married couple. Nor could she say whether the winnings would be collected in a lump sum or an annuity.
The emergency regulation applies to all lottery winnings in excess of $100,000, not just the Powerball winner.
