It's my understanding that when you present the winning ticket, the Lottery Commision waits about two weeks while a background check is done on the winner, to see if the winner owes any back taxes or outstanding student loans or child support arrearages.
https://www.lotterypost.com/thread/200799
The taxable amount to be reported on the Massachusetts tax return is $6,475 ($6,500 less the cost of the 3 winning ticket amounts of $25.) For federal purposes, the winnings of $6,500 are reported on the 1040, Line 21, and the losses of $955 may be claimed on Schedule A under Other Miscellaneous Deductions.
http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/massachusetts-income/gambling-and-lottery.html
While the government only withholds 25% of the winnings, the full 35% will be owed at tax time, said Luscombe. It's not just Uncle Sam who gets a share of the prize money. State taxes will also apply. In Arizona, a resident who has the winning ticket will be charged a 5% tax on the prize money. If a non-resident bought the winning ticket, a 6% rate will apply. The resulting tax bill will be either $10 million or $11 million, according to CCH.
http://money.cnn.com/2012/11/30/pf/taxes/powerball-lottery-tax/index.html
Reporting of Lottery winnings and costs of winning tickets. State and Federal Thresholds for Withholding of Lottery and Wagering Winnings: The state threshold for withholding of tax on lottery and wagering winnings is $600. The federal threshold for withholding on these winnings remains at $5,000.
http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/massachusetts-income/gambling-and-lottery.html
Example #2 to Illustrate Mass Withholding Requirements on Massachusetts State Lottery Winnings: If a taxpayer purchased one ticket in the amount of $10 for the Massachusetts state lottery and won $900, the taxable amount to be reported on the Massachusetts tax return is $890. Even if the taxpayer purchases other lottery tickets during the year totaling $930, the amount reported to Massachusetts is still $890.
http://www.mass.gov/dor/individuals/filing-and-payment-information/guide-to-personal-income-tax/massachusetts-income/gambling-and-lottery.html
However, I'm not so sure they check on out-of-state offenders regarding child support or student loans, back property tax, etc. By the way, I know everyone here is talking about millions, but it doesn't matter what you win. If you win $5,000 and owe it in speeding & parking tickets, they'll keep it! I believe if someone has a judgment against you, they will deduct that amount as well.
https://www.lotterypost.com/thread/200799
Posted: September 19, 2009, 5:36 pm - IP Logged. THE ANSWER IS SIMPLE: YES, YES & YES...They will find a way to make you pay back taxes, child support, student loans no matter how you earn or win your money--it a collective debt owe and you will not find a way out of it, if you won the lottery.
https://www.lotterypost.com/thread/200799
If you won a $200 million jackpot, you could owe millions in taxes. Assuming that you didn't make any money working and don't have any deductions, you can subtract the $6,200 standard deduction from your winnings for a total income of $199,993,800. Your first $406,750 of income gets hit with a total tax of $118,188.75.
http://classroom.synonym.com/much-federal-taxes-held-lottery-winnings-20644.html
The IRS has hit a jackpot of its own, with millions of dollars in taxes potentially coming its way. The final jackpot rang in at $587.5 million on Wednesday night. Two winning tickets, bought in Missouri and Arizona, have been announced so far. The winners have 180 days to claim their money.
http://money.cnn.com/2012/11/30/pf/taxes/powerball-lottery-tax/index.html
Taking both state and federal taxes into consideration means the Arizona winner would owe up to $78 million in taxes and take home $114 million. The Missouri winner's tax bill would total about $75 million, leaving a take of $117.5 million.
http://money.cnn.com/2012/11/30/pf/taxes/powerball-lottery-tax/index.html
how much tax will i owe on lottery winnings
You owe 35 percent tax on lottery winnings. You will owe 35% tax on lottery winnings.  