The Nonprofit FAQ
| How does the IRS treat nonprofits' gambling revenues? |
| The new version of Form 990, adopted for tax years 2008 and following, contains a new schedule ("G") for reporting detailed information about gambling activities of any organization with more than $15,000 in gambling receipts. There is more explanation of the Form 990 at http://www.idealist.org/if/i/en/faq/57-95/62-42 . From the Exempt Organizations Update: What's Hot In Washington,May, 1998, by James J. McGovern, KPMG Peat Marwick LLP -- Exempt Organizations Tax Practice (EXOTAX) © 1998 KPMG Peat Marwick LLP Gaming Publication for Tax-Exempt Organizations ReleasedPublication 3079, Gaming Publication for Tax-Exempt Organizations, outlines federal requirements for income, employment and excise taxes when exempt organizations conduct or sponsor a broad range of gaming activities, including bingo, lotteries, pull-tabs, and pari-mutuel betting. This comprehensive publication discusses UBIT, recordkeeping, filing requirements, and contains sample spreadsheets that can be used to document games played, receipts per game, and bingo inventory and receipts. It is a "must read" for exempts that conduct or sponsor gambling activities. Publication 3079 provides an excellent insight into the Service's approach and likely position on technical issues. It also gives organizations and their tax advisers the opportunity to conduct self-audits to insure compliance before the IRS arrives. This is important because review of exempt gaming activities is a high audit priority. This and many other IRS publications can be downloaded through http://www.irs.gov/formspubs/index.html. It is also available for immediate download, without any welcome screens or explanations, from http://www.irs.gov/pub/irs-pdf/p3079.pdf . It is in .pdf format; there is a description of this and other file formats on the IRS website at http://www.irs.gov/help/fileformats.html. That page also provides instructions on how to download the free .pdf file reader if need be. Gambling is, of course, also closely regulated by states and many municipalities. Any nonprofit considering a raffle, bingo game, or other gambling activity as a fund-raiser should investigate very carefully before accepting any money from the public or otherwise initiating a gambling program. Further, as explained in http://www.idealist.org/if/i/en/faq/411-112/59-35, purchases of raffle tickets and other gambling expenditures should not be considered tax-deductible contributions by supporters, since the chance of winning is seen by the IRS as a quid pro quo equal in value to the price of the ticket. -- PB |