Virginia’s new lottery game, “Bank a $Million,” purports to be tax-free. The Commonwealth of Virginia will supposedly pay the federal taxes for those who win that game, allowing them to bank their entire million dollars in winnings, thus the name. However, is this really the case? According to the fine print, it might not. I suspect that the IRS will count Virginia’s payment of the winner’s tax liability as income. For example, let’s say the winner would normally have owed $396,000 in taxes (39.6%), which is then paid by Virginia. The IRS would count that $396,000 as income for the winner. Consequently, the winner would have to pay the IRS $130,680 (33%) in taxes. So, even though the winner would not technically owe any taxes on the $1 million in winnings, he or she would still be liable for the taxes on the tax amount paid on his or her behalf by the commonwealth. While not tax free, that’s still a tax savings of $256,320.