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CHIP-CHapter Information Place
Chip > Policies / Guidelines > Raffles - guidelines
Raffles — guidelines
A raffle is an activity in which a participant is asked to purchase a ticket(s)
for a specified price to win a prize(s). While raffles are typically thought
of as selling tickets with multiple prizes over a period of time, with a predetermined
prize-drawing date, there are other activities that also qualify as raffles.
Selling tickets for a chance to win any item, regardless of value, is considered
a raffle and may require a license. Examples include selling tickets for chances
to win items such as baskets of goodies, a quilt, etc.; bucket raffles with
various prizes where people buy tickets and then place the tickets in whatever
bucket has prizes they’d like to win; etc.
If your chapter is considering a charitable raffle as a fund-raising activity,
keep in mind that raffles are considered gaming activities, and also that
certain prizes require recipients to pay taxes.
Therefore, the chapter (including service teams of a chapter) must adhere
to the following guidelines:
- Rules for conducting charitable raffles vary widely by state. If you plan
to hold a raffle, contact your state gaming commission to determine whether
your state allows such raffles, and if so, what procedures are required
for obtaining a license. Other requirements, such as reporting the information
after the raffle is conducted, also may apply in your state.
For winners of raffle items with a fair market value (FMV) of $600
or more, a W-9 form with a letter explaining the W-9 must be given to
each winner. The IRS will need to know the winner's name, address, Social
Security number and fair market value of the prize.
- W-9s are printable from the IRS
Web site. You will need one W-9 for each prize with a fair market
value of $600 or more.
The W-9 requests the winner’s name, address, Social Security number
and signature. It is used by Thrivent Financial for Lutherans to generate
a W2-G in January of the following year. The fair market value of the
prize is considered taxable income to the winner.
The recipient should be asked to complete and sign the W-9 when the
prize is picked up, to ensure it is completed.
- A letter should be provided to the recipient. Suggested wording:
Dear prize winner:
Congratulations on winning the prize description that was awarded
in the raffle hosted by name of chapter Chapter of Thrivent
Financial for Lutherans. Because the prize description is valued
at $value of prize, the prize winnings are considered taxable
income to you. We need to report your name, address, Social Security
number and signature, along with the fair market value of the prize
to the IRS on Form W2-G. Therefore, please complete the enclosed W-9
and return it to me in the envelope I’ve provided. We will pass the
information on to the IRS when we’ve received it.
- After being forwarded to the chapter’s financial director, the W-9 should be sent to Ann Salm, Z8, Thrivent
Financial for Lutherans, 4321 N. Ballard Rd., Appleton, WI 54919.
If a chapter does not obtain the W-9, the chapter will be subject
to paying tax withholding at a rate of 38.88 percent of the fair market
value of the prize.
Note: If there is a value on the ticket, the printed value determines
the need for a W-9.
- If the raffle includes a prize valued at $5,000 or more, please
read the instructions below.
If a prize is valued at $5,000 or more, taxes must be collected
from the winner at the time of delivery, as well as obtaining the W-9.
- The recipient should issue a check, made payable to Thrivent Financial
for Lutherans, for an amount equal to 25 percent of the fair market
value of the prize he or she won.
The chapter should send the check, along with the W-9, to Ann Salm,
Z14, Thrivent Financial for Lutherans, 4321 N. Ballard Rd., Appleton,
WI 54919-0001.
If the chapter does not wish to have the recipient pay the taxes,
the chapter will be responsible for paying the taxes out of the proceeds
of the event. The tax rate in this situation is 33.33 percent as the
taxes paid on behalf of the winner become part of the taxable winnings.
The chapter then should issue a check, payable to Thrivent Financial
for Lutherans for the taxes and send to Ann Salm, Z14, Thrivent Financial
for Lutherans, 4321 N. Ballard Rd., Appleton, WI 54919-0001.
- If the chapter doesn’t collect taxes from the recipient, the chapter
will be deemed responsible at the rate of 33.33 percent if it acquired
a W-9 from the recipient and at a rate of 38.88 percent if it didn’t
collect a W-9 from the recipient.
The tax rates listed are Federal rates only. The chapter should contact
its state taxing authority for any applicable state rates.
The contact person of the activity should contact the Fraternal
Service Center at 800-236-3736 before the activity to ensure that the
process is understood and followed. See the IRS Web site for a printable
version of the W-9
form.
- If you receive prize donations toward your raffle or event, all donations
with a value of $250 or more must be tracked, use the Donation
Form.
There are legal implications for our chapters if they report or deposit
funds raised through a raffle for which they do not have a license.
There may be situations when a chapter service team cohosts a fund-raiser,
which includes a raffle, with another organization that owns a raffle license.
Reporting raffle-generated income in these situations would indicate that
the chapter has a valid raffle license and conducted the raffle. Therefore,
if a chapter service team is doing a raffle with another organization that
has the raffle license:
- The chapter cannot report any gross or net income raised from the
raffle.
- If the fund-raiser includes multiple activities, with a raffle being one
of them, the chapter should not report or deposit any of the funds raised
from the raffle when reporting net income from the fund-raiser.
- The service team may not apply for supplemental funding for the amount
raised that is attributable to the raffle.
As another option, we suggest that chapter service teams consider conducting
silent auctions rather than raffles. There are no laws governing silent auctions
because they are not considered a gaming activity. If you have questions about
raffles, contact the Fraternal
Service Center at 800-236-3736.
Note: We are not able to advise on licensing requirements. You must
contact the state gaming commission before calling us.
Because of gaming and tax laws, Thrivent Financial for Lutherans does
not encourage you to conduct raffles.
Fund-raising ticket guidelines
Tickets used to raise funds for a helping activity should include an attached
stub for the contributor to keep. The stub should include:
- Contributor's name.
- Contributor's address.
- Amount of contribution.
- Name and date of benefit.
- Sponsored by Chapter Name (i.e., sponsored by ABC County Chapter
of Thrivent Financial for Lutherans).
Tickets may be used for admittance to chapter-hosted activities or for door-prize
drawings. In these cases, the chapter should retain these stubs or prepare
a list of donors and the amount contributed in order to verify any contribution.
Additional Topics
Gaming activities (bingo, poker, etc.) – guidelines
This is proprietary information that is solely for
use by employees, volunteers, and agents of Thrivent Financial for Lutherans
in connection with fraternal activities of Thrivent Financial for Lutherans.
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