We're running a sweepstakes in. Show More
We're running a sweepstakes in a video game, and in our rules (which we mostly copied from a public domain sweepstakes rules template) it says "void where taxed."
We're trying to get the game through a peer review system, but somebody has failed it for this reason:
"Contest restricts jurisdiction to 50 states & DC then says it's void where taxed: prize winnings are taxed by the IRS as income. As such the contest is invalid everywhere and is thus false advertising."
Now we're confused by this, because several contest/sweepstakes templates include the "void where taxed" line. Additionally, googling 'contest void where taxed' or 'sweepstakes void where taxed' brings up several contests that other companies are running, who also have that line in their rules. Surely all these templates and other companies are not in the
wrong here, right?
Anyway, we don't want to suffer the consequences of our game failing peer review, so we want to appeal this fail. Here's what we're thinking about saying:
"This is a misinterpretation of our legal text. Of course, everything taxable that a person receives during the year should be claimed on their end of the year tax form (such as the 1040 form). However, what we are referring to by "void where taxed" is any special and/or additional taxes that would apply to sweepstakes. From our research, we don't believe there are any of these additional taxes in the 50 states and DC. We are merely covering our tails in case there is some hole-in-the-wall county somewhere that has some special tax for sweepstakes."
What do you think of this response? And why do so many contest rules state "void where taxed"?