"I won a $97k jackpot in Tunica, MS a few years back, and the state ofIllinois came after me with penalties and fines for not reporting iton my Illinois income tax, even though I had paid Mississippi's tax."
I think who ever prepared your tax return might have screwed this one up.
The 3% Mississippi tax is not "really" an income tax but rather a "jackpot" tax.
Isn't the Illinois tax return based on your federal return (which I assume you reported the Mississippi jackpot on) and then adjustments. Did you then backout the Mississippi jackpot? On what basis?
I pay state taxes in my home state on all jackpot wins and if state taxes are withheld in the local jurisdiction then apply for a refund as a non-resident (except for Mississippi where it is not an income tax).
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