N.Y. Comp. Codes R. & Regs. tit. 20 § 171.11

Current through Register Vol. 46, No. 25, June 18, 2024

Section 171.11 - Extension of withholding of New York State personal income tax to certain gambling winnings

Tax Law, § 671(b)(2)(D) and (E)

(a)

(1) Determining New York State personal income tax to be withheld. In addition to the wages subject to withholding of New York State personal income tax under this Part, any payment made by the New York State Division of the Lottery to a payee of winnings from a wager placed in a lottery where the proceeds from such wager exceed five thousand dollars and such proceeds are payable pursuant to a prize claim made by an individual who was a resident of New York State at the time of the selection of the prize winning lottery ticket and any payment of winnings from a wagering transaction in a pari-mutuel pool with respect to horse races to a resident individual, where the proceeds from such wager exceed $1,000 and the amount of such proceeds is at least 300 times as large as the amount wagered, must be treated as if it were a payment of wages by an employer to an employee for a payroll period.

(2) For purposes of paragraph (1) of this subdivision, proceeds from a wager shall be determined by reducing the amount received by the amount of the wager.

(b) All requirements contained in Article 5 of this Title with respect to filing New York State employer returns, furnishing information and payment of New York State personal income tax withheld, apply equally to the withholding of New York State personal income tax on payments of lottery winnings by the New York State Division of the Lottery and on winnings from a wagering transaction in a pari-mutuel pool with respect to horse races under this section, except that wherever form IT-2102 is referred to, Report of Certain Gambling Winnings (form IT-2102G) is to be substituted therefor.

(c)Amount to be withheld.

The amount of New York State personal income tax to be deducted and withheld by the New York State Division of the Lottery from certain payments of lottery winnings under this section shall be computed by multiplying such winnings payment by a percentage equal to the highest effective rate of New York State personal income tax on New York taxable income for the applicable taxable year,without any allowance for withholding exemptions.

(d) Determination of residence.

(1) For purposes of applying the provisions of subdivision (a) of this section, each payee who is to receive a payment of certain gambling winnings subject to withholding of New York State personal income tax shall furnish the payer with a statement on form IT-2102G or IT-340 (whichever is applicable), under penalties of perjury, containing:

(i) the name, address and taxpayer identification number of the payee accompanied by a declaration that no other person is entitled to any portion of such payment; or

(ii) the name, address and taxpayer identification number of the payee and of every other person entitled to any portion of such payment; and

(iii) such other information as may be required by forms and instructions of the Division of Taxation.

(2) Where more than one payment of gambling winnings subject to withholding of New York State personal income tax is to be made with respect to a single wager (i.e., a lottery prize funded by an annuity), the payee is required to furnish the payer with the statement required by paragraph (1) of this subdivision only with respect to the first such payment, provided that such other payments are taken into account in a Report of Certain Gambling Winnings referred to in Part 172 of this Article.

(e)

(1) For requirements relating to payers' returns of New York State personal income tax withheld and payment of such withheld New York State personal income tax, see Part 174 of this Article.

(2) For requirements relating to New York State information statements for payees, see Part 172 of this Article.

(3) For requirements relating to New York State information returns by payers relating to payments of certain gambling winnings subject to withholding, see Part 174 of this Article.

(f)Withholding on payments from the New York State Division of the Lottery upon a change of residence.

Where a resident payee of payments of lottery winnings from the New York State Division of the Lottery changes status from resident to nonresident, the provisions of this section are applicable to such lottery winnings unless such payee elects to make the required special accruals referred to in section 154.10 of this Title. In such case, a payee may elect to have withholding cease on such winnings by furnishing the New York State Division of the Lottery and the Division of Taxation a signed written statement containing the payee's name, social security number, former New York address, current address and any other information required by the Division of Taxation by forms and instructions. The Division of Taxation shall review a payee's statement for purposes of verification of such payee's resident status, and of such payee's compliance with the special accrual requirements under section 154.10 of this Title and give written notice to the New York State Division of the Lottery of its determination. The Division of Taxation will provide the New York State Division of the Lottery with a copy for the payee of each notice it furnishes to the New York State Division of the Lottery under this subdivision, in addition to the notice furnished to the New York State Division of the Lottery for its own use. The Division of Taxation shall also mail a similar notice to the payee at the address of the payee as shown on such payee's statement. The New York State Division of the Lottery shall continue to withhold taxes from lottery winnings payments pending written notice by the Division of Taxation that it is to comply with the election made by the payee. A verified statement of election is to take effect with respect to payments of lottery winnings which occur at least 30 days after the date on which the New York State Division of the Lottery is notified by the Division of Taxation to comply with a taxpayer's statement of election.

(g)Penalties.

Civil and criminal penalties that may be applicable to payees for making a statement under section 671 of the Tax Law which results in a cessation of the deducting and withholding or in no withholding of New York State personal income tax not in accordance with section 671 of the Tax Law, include, but are not limited to, the penalties imposed pursuant to sections 685(s), 1801(a) and 1804(a) of the Tax Law.

(h) The provisions of this section shall be deemed to apply in like manner to the City of New York personal income tax on residents and the City of Yonkers income tax surcharge on residents. The amount of City of New York personal income tax on residents to be deducted and withheld from certain payments of lottery winnings by the New York State Division of the Lottery under this section shall be computed by multiplying such winnings payment by a percentage equal to the highest effective rate of New York City personal income tax on residents on New York City taxable income for the applicable taxable year, without any allowance for withholding exemptions. The amount of City of Yonkers income tax surcharge on residents to be deducted and withheld from certain payments of lottery winnings by the New York State Division of the Lottery under this section shall be computed by multiplying such winnings payment by a percentage which is equal to the product of the rate of the City of Yonkers income tax surcharge on residents for the applicable taxable year multiplied by the highest effective rate of New York State personal income tax on New York taxable income for the applicable taxable year, without any allowance for withholding exemptions.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 171.11