GEN-24 – Withholding Lottery Winnings to Offset Tax Liability

The Department regularly notifies the Tennessee Lottery of individuals who owe tax debts of over $100 to the state.  If such a person wins a prize from the Tennessee Lottery, the Lottery Corporation may withhold all or a portion of the winnings to offset the debt the person owes to the state. When this happens, the Tennessee Lottery must notify the person of such action and the reason the winnings were withheld.

 If the person wishes to dispute the withholding, the person must file an appeal with the Lottery Corporation within 30 days. The person should contact the Lottery Corporation with any questions regarding this process. The Lottery Corporation may be contacted here.

Assuming all outstanding tax liability is satisfied, if the person misses the 30-day deadline and lottery winnings are used to offset tax liability owed to the Department, he or she may file a claim for refund with the Department after the Department receives the funds from the Lottery Corporation (typically four to six weeks). More information on filing a claim for refund may be found here. 

Reference: Tenn. Code Ann. § 4-51-204

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