How cheats use these special lottery tickets to avoid paying their lawful taxes
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Crooked lottery players can buy tickets like these on eBay to offset their income (puss not included).
It seems simple enough. On eBay, Craigslist and elsewhere, you can buy or rent used lottery tickets which you then use to offset your lottery costs which are represented as 'losses.'
The tickets are presented by gamblers as tangible proof they can show to government tax officials to prove their gambling losses exceed winnings.
In the photo above from eBay, tickets for sale are described as "30 bags of $1000 LOSING 2014 NY scratch off lottery tickets. buy what u need."
According to the Daily Beast, winners can go online and get $5,000 worth of losing lottery tickets to cover their $5,000 in gambling winnings.
One Jersey Shore seller snapped a picture of $1,100 worth of Daily 4 and Mega Millions game tickets with the pitch: “Good for tax writeoff for your 2014 taxes to offset your winnings.”
They hope the lottery tickets serve as a security blanket if the auditor comes calling.
But Alex Traverso (right), a spokesman for the California State Lottery, the third-largest in the country, told The Daily Beast that the practice of stockpiling losing stubs and submitting them to offset winnings is harebrained.
"Sure, every bit helps, but are people willing to go through the effort it takes to authenticate that the losses they’re claiming were actually theirs and not someone else’s?" he said.
"Are people willing to risk an audit? My sense tells me that most wouldn’t be."
He emphasized that his agency 'strongly discourages' anybody from selling or buying losing tickets for tax purposes.
The rule in the USA is this: Whatever losses you incur can be deducted from your winnings but “may not be more than the amount of gambling income reported on your return,” according to the IRS.
So if you banked $100,000 and suffered losses of $10,000, you have to pay taxes on the difference, or in this case $90,000.
So there is an incentive to write off a substantial sum in losses, thereby offsetting the taxes you pay. Ideally, you can write off, say, $50,000 in losses, and that would mean you only have to pay taxes on half of the winnings.
That’s where some desperate schemers start dreaming up ways to increase their loss totals so that they can shell out less money to the taxman.
Not every lottery-ticket seller on Craigslist is trying to collude in gaming the IRS. Many ads posted seem to be above board, including those selling tickets for memorabilia.
North American Lottery Association President Terry Rich told The Daily Beast that he advises against anybody trying to save money by buying and then writing off losing lottery tickets.
"Whenever agencies like ours deal with big dollars, there is going to be people who take advantage of the system," he said. "We want to make sure people adhere to the law. In this case, we suggest people talk to their tax attorney or the IRS."
READ MORE: Daily Beast
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