N.Y. Tax Law § 1613: Certification of prize winners; payment of prizes

§ 1613. Certification of prize winners; payment of prizes. a. It shall

be the duty of the director to require that all prizes over five

thousand dollars in any game be awarded to holders of winning tickets

for that game as provided in this section and section sixteen hundred

fourteen of this article. Within one week after any drawing or selection

of prize winning lottery tickets, the division shall deliver to the

comptroller a certified list of the tickets to which prizes are awarded

and the amount of each such prize. Upon receipt of such certified list

and voucher of the division, moneys sufficient for the payment of such

prizes shall be paid to the division from the lottery prize account,

upon audit and warrant of the comptroller. Moneys for the payment of

lottery prizes shall be deposited by the director as provided in section

sixteen hundred eleven of this article and the withdrawal of such moneys

for the payment of prize winners shall be subject to a check signed by

the director or such officers or employees of the division as the

director may designate. The division shall each month provide the

comptroller with a record of all such withdrawals from the director's

accounts. Payment of prizes shall be made by the division to holders of

the tickets to which prizes are awarded, except that payment of any

prize drawn may be paid to the estate of a deceased prize winner, may be

paid pursuant to a court order granted as a result of a proceeding as

provided in subdivision d of this section, and except that any person

pursuant to an appropriate judicial order may be paid the prize to which

the winner is entitled. The division shall be discharged of all further

liability upon payment of a prize pursuant to this subdivision.

b. If the person entitled to a prize on any winning ticket is under

the age of eighteen years, and such prize is less than five thousand

dollars, the division may make payment by delivery to an adult member of

the minor's family or a guardian of the minor of a check or draft

payable to the order of such minor. If the person entitled to a prize on

any winning ticket is under the age of eighteen years and if such prize

is five thousand dollars or more, the division may make payment to such

minor by depositing the amount of the prize in any financial institution

to the credit of an adult member of the minor's family or a guardian of

the minor as custodian for such minor. The person so named as custodian

shall have the same duties and powers as a person designated as a

custodian in a manner prescribed by part six of article seven of the

estates, powers and trusts law, and for purposes of this section the

terms "adult", "member of a minor's family", and "guardian" and

"financial institution" shall have the same meaning as in said part of

said law. The division shall be discharged of all further liability upon

payment of a prize to a minor pursuant to this subdivision.

c. 1. Notwithstanding any inconsistent provision of law, the director

may award and pay a "Lotto" prize to a claimant without a winning

ticket, if:

(i) the claimant has filed a perfected claim therefor;

(ii) the perfected claim is for a first prize in excess of five

million dollars;

(iii) at least one year has elapsed since the date of the drawing for

which the prize is claimed;

(iv) no other perfected claim has been filed therefor; and

(v) the perfected claim has been authenticated by the division.

2. For purposes of this section, a "perfected claim" shall consist of

a written request that the prize be awarded and paid to the claimant,

accompanied by:

(i) a "Players Copy" of a claim validation report showing that the

original winning lottery ticket was produced by the on-line lottery

computer system at the same time and place as the validation of a

previous first-prize claim in the "Daily Numbers" game;

(ii) "Lotto" play cards bearing the same number combinations as were

played at such time and place immediately before or immediately

following the validation of such "Daily Numbers" first prize claim;

(iii) a written statement from the licensed lottery sales agent

stating that the agent believes the missing ticket was sold to the

claimant;

(iv) a verified written statement explaining the circumstances under

which the winning ticket was lost; and

(v) a filing fee of one hundred dollars.

3. Within thirty days of the receipt of a perfected claim, the

division shall attempt to authenticate it by comparing it to the records

of the division, including electronic information provided by its

on-line service provider. A perfected claim may be deemed

"authenticated" if:

(i) the "Players Copy" and "Lotto" play cards included therewith

correspond to the records of the division; and

(ii) none of the information included in the perfected claim is

contradicted by the records of the division.

4. The director may promulgate rules and regulations to implement the

provisions of this subdivision.

d. 1. The right of any person to receive payments under a prize that

is paid in installments over time by the division may be voluntarily

assigned, in whole or in part, if the assignment is made to a person or

entity designated pursuant to an order of the supreme court of the

county where the assigning prize winner resides or where the

headquarters of the division is located. A court may issue an order

approving a voluntary assignment and directing the division to make

prize payments in whole or in part to the designated assignee, if the

court finds that all of the following conditions have been met:

(i) The assignment is in writing, is executed by the assignor, and is,

by its terms, subject to the laws of this state.

(ii) The purchase price being paid for the payments being assigned

represents a present value of the payments being assigned, discounted at

an annual rate that does not exceed ten percentage points over the Wall

Street Journal prime rate published on the business day prior to the

date of execution of the contract.

(iii) The contract of assignment expressly states that the assignor

has three business days after the contract was signed to cancel the

assignment.

(iv) The assignor provides a sworn affidavit attesting that he or she:

(A) Is of sound mind, is in full command of his or her faculties, and

is not acting under duress;

(B) Has been advised regarding the assignment by his or her own

independent legal counsel, who is unrelated to and is not being

compensated by the assignee or any of the assignee's affiliates, and has

received independent financial or tax advice concerning the effects of

the assignment from a lawyer or other professional who is unrelated to

and is not being compensated by the assignee or any of the assignee's

affiliates;

(C) Understands that he or she will not receive the prize payments or

portions thereof for the years assigned;

(D) Understands and agrees that, with regard to the assigned payments,

the division and its officials and employees will have no further

liability or responsibility to make the assigned payments to him or her;

(E) Has been provided with a one-page written disclosure statement

setting forth, in bold type of not less than fourteen points, the

payments being assigned, by amounts and payment dates; the purchase

price being paid; the rate of discount to present value, assuming daily

compounding and funding on the contract date; and the amount, if any, of

any origination or closing fees that will be charged to him or her; and

(F) Was advised in writing, at the time he or she signed the

assignment contract, that he or she had the right to cancel the

contract, without any further obligation, within three business days

following the date on which the contract was signed.

(v) Written notice of the proposed assignment and any court hearing

concerning the proposed assignment is provided to the division's counsel

at least thirty days prior to any court hearing. The division is not

required to appear in or be named as a party to any such action seeking

judicial confirmation of an assignment under this subdivision, but may

intervene as of right in any such proceeding.

2. A certified copy of a court order approving a voluntary assignment

must be provided to the division no later than thirty days before the

date on which the payment is to be made.

3. A court order obtained pursuant to this section, together with all

such prior orders, shall not require the division to divide any single

prize payment among more than three different persons. Nothing in this

section shall prohibit substituting assignees as long as there are no

more than three assignees at any one time for any one-prize payment.

4. If a husband and wife are co-owners of a prize, any assignment of

the prize must be made jointly.

5. A voluntary assignment may not include portions of payments that

are subject to offset on account of a defaulted or delinquent child

support obligation, non-wage garnishment, or criminal restitution

obligation or on account of a debt owed to a state agency. Each court

order issued under paragraph one of this subdivision shall provide that

any delinquent child support or criminal restitution obligations of the

assigning prize winner and any debts owed to a state agency by the

assigning prize winner, as of the date of the court order, shall be set

off by the division first against remaining payments or portions thereof

due the prize winner and then against payments due the assignee.

6. The division and its respective officials and employees shall be

discharged of all liability upon payment of an assigned prize under this

subdivision. The assignor and assignee shall hold harmless and indemnify

the division, the state of New York, and its employees and agents from

all claims, actions, suits, complaints, and liabilities related to the

assignment.

7. The division may establish a reasonable fee to defray any

administrative expenses associated with assignments made under this

subdivision, including the cost to the division of any processing fee

that may be imposed by a private annuity provider. The fee amount shall

reflect the direct and indirect costs associated with processing

assignments.

8. If at any time the Internal Revenue Service or a court of competent

jurisdiction issues a determination letter, revenue ruling, other public

ruling of the Internal Revenue Service, or published decision to the

division or to any lottery prize winners declaring that the voluntary

assignment of prizes will affect the federal income tax treatment of

prize winners who do not assign their prizes, the division shall

immediately file a copy of that letter, ruling, or published decision

with the attorney general, the secretary of state, and the

administrative office of court administration. A court may not issue an

order authorizing a voluntary assignment under this subdivision after

the date any such ruling, letter, or published decision is filed.

9. A contract of assignment in which the assignor is a lottery winner

shall include a sworn affidavit from the assignee. The form of the

affidavit shall include:

(i) A summary of assignee contacts with the winner;

(ii) A summary of any law suits, claims, and other legal actions from

lottery winners regarding conduct of the assignee or its agents;

(iii) A statement that the assignee is in good standing in its state

of domicile and with any other licensing or regulatory agency as may be

required in the conduct of its business;

(iv) A brief business history of the assignee;

(v) A statement describing the nature of the business of the assignee;

and

(vi) A statement of the assignee's privacy and non-harassment policies

and express affirmation that the assignee has followed those policies in

New York.

10. The assignee shall notify the division of its business location

and mailing address for payment purposes during the entire course of the

assignment. The division shall be discharged of all further liability

upon payment of a prize pursuant to this subdivision.