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New Jersey lottery winner sues state for breach of contract

On Behalf of | Jun 23, 2011 | Breach Of Contract |

A Rockaway woman has filed a lawsuit against the state of New Jersey claiming breach of contract in an attempt to secure a $1.58 million tax refund that she says the state is unfairly keeping from her.

The tax was originally assessed on $14.9 million the woman won in the state lottery on June 4, 2009. According to The Star Ledger, the woman points out in her lawsuit that at the time she took her lump sum prize, state lottery winnings were not considered taxable income under state law.

At issue is a change in the state law enacted on June 29, 2009 that made lottery winnings of $10,000 or greater subject to state income tax. The law was not just for all lottery winnings to come, but was made retroactive to January 1, 2009.

According to The Star-Ledger, lawyers for the woman claim that making the change in the tax law retroactive “was unfair and inappropriate.” They say that lottery winners made their choices upon the information available at the time and that taking taxes from lump sum payments after the fact was unfair. They also say the change in the law represented a breach of contract because the rules were changed after the winning ticket was purchased.

The plaintiff paid the tax, but she then filed an amended state tax return seeking a refund on the basis that the winnings were supposed to be exempt. The New Jersey Division of Taxation rejected the amended return and rejected a subsequent appeal.

Source:

Rockaway woman suing state over lottery tax (The Star-Ledger)