The tax is not levied on any income of under $ 5000. The tax laws of the state vary, so that with the tax code state at the local level to review additional information. Most states that tax revenues are not tax lottery winnings to the state. The donor of a prize may not be reported to the IRS, are not required to withhold taxes if the price is below a certain amount. The rule applies to withholding tax on certain gains, but not to the actual taxes paid.”]
Source: http://po-fleec-bedwettin.blogspot.com/2010/01/cash-sweepstakes-what-is-tax-due.html