Aside from the winners, there’s no one more excited about sweepstakes prizes than the IRS. States that collect income taxes get pretty tickled, too.
Many sweepstakes winners don’t realize they have partners when it comes to accepting their prize. The IRS and state treasurers don’t care who wins the prize because they are guaranteed to receive a share of virtually every prize awarded. (They may, however, root for a winner in the highest tax bracket.)
Thompson Coburn’s tax gurus can speak to this more specifically, but here are some basic facts about state and federal tax laws that sweepstakes creators ...