N.J. Admin. Code § 18:35-7.6

Current through Register Vol. 56, No. 11, June 3, 2024

Section 18:35-7.6 - Gambling winnings subject to withholding

(a) Every payor of New Jersey gambling winnings which are subject to withholding, as defined in (d) below, shall deduct and withhold New Jersey gross income tax thereon in an amount equal to three percent of payments made to both New Jersey residents and nonresidents as defined in 54A:1-2(m) and (n). Such withholding shall be required in all instances wherein the payor of such winnings is required to withhold for Federal income tax purposes under subsection (q) of section 3402 of the Federal Internal Revenue Code of 1986 ( 26 U.S.C. § 3402 ), as amended.

(b) The income tax withholding requirement imposed under 54A:7-1(c) and this section shall not apply:

1. With respect to the payment of winnings on prize amounts from the New Jersey Lottery in amounts of $ 10,000 or less that are excluded from gross income pursuant to 54A:6-11; and

2. With respect to a payment of winnings from a slot machine, or a keno or bingo game.

(c) Any person receiving a payment of New Jersey gambling winnings subject to withholding must furnish the payor a statement made under the penalties of perjury containing the information in (c)1 or 2 below. The requirements set forth in (c)1 and 2 below may be satisfied by providing the payor with a copy of Federal Form W-2G or 5754, whichever is applicable.

1. The name, address, and taxpayer identification (social security) number of the winner accompanied by a declaration that no other person is entitled to any portion of such payment; or

2. The name, address, and taxpayer identification (social security) number of the recipient and of every person entitled to any portion of such payment.

3. The requirement set forth in (c)1 and 2 above may be satisfied by providing the payor with a copy of Federal Form W-2G or 5754, whichever is applicable.

(d) New Jersey gambling winnings subject to withholding means any payment from:

1. A wager placed in a sweepstakes, wagering pool, or lottery, but only if the proceeds from the wager exceed $ 1,000; or

2. Any other wagering transaction, including but not limited to, a wagering transaction in a parimutuel pool with respect to horse races, but only if the proceeds from the wager:

i. Exceed $ 1,000; and

ii. Are at least 300 times as large as the amount of the wager.

3. New Jersey Lottery winnings from a prize in an amount exceeding $ 10,000 as provided under 54A:6-11.

4. If proceeds from a wager as set forth in (d)1 and 2 above qualify as winnings subject to withholding, then the total proceeds from the wager, and not merely amounts in excess of $ 1,000, are subject to withholding.

(e) "Proceeds from a wager" is the amount paid with respect to a wager, less the amount of the wager. Amounts paid with respect to identical wagers are treated as paid with respect to a single wager for purpose of calculating the amount of proceeds from a wager.

1. In determining the amount paid with respect to a wager, proceeds which are not money shall be taken into account at the fair market value.

2. Periodic payments, including installment payments or payments which are to be made periodically for the life of a person, are aggregated for purposes of determining the proceeds from a wager. The aggregate amount of period payments to be made for a person's life shall be based on the person's life expectancy. For purposes of determining the amount subject to withholding, the first periodic payment shall be reduced by the amount of the wager.

(f) Payments to any person of winnings subject to withholding under this section shall be treated as if they are wages paid by an employer to an employee under the provisions of 54A:7-2 through 54A:7-7; provided, however, that such payments shall be considered gambling winnings for all other purposes under the Gross Income Tax Act (54A:1-1 et seq.).

N.J. Admin. Code § 18:35-7.6

Amended by 48 N.J.R. 295(a), effective 2/16/2016