My 16 month old nephew was recently diagnosed with Cystic Fibrosis and their insurance is refusing to cover $15,000 worth of RSV vaccinations that he needs to have. I want to host a trivia night (rent a hall, or hopefully have one donated) with gift baskets to bid on, a 50/50 raffle, and a cash prize for the winner of the trivia contest (split half and half between my nephew and the winners). The proceeds would go to help pay his medical bills. However, I'm not sure I can do this without legal issues and tax problems. Does anyone know? Thank you so much!
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Hey! I saw this post and I am so sorry for your unfortunate circumstances. I wanted to make sure, however, that you didn't get yourself into trouble. Nonprofit or for profit or politician - in many states YOU CANNOT JUST HOLD A RAFFLE!!! Please forgive the rudeness of capital letters. But I have seen individual demolished by the IRS and 501c3's fined tens of thousands of dollars over not following their state's raffle laws to the letter. Not that the state is generally forthcoming with this information! This is one of the biggest mistakes that nonprofits and other companies/individuals make. Pleeeease check out your laws in your state! Many states consider ALL raffles - even 50/50 raffles out of backyard shed, to be gambling. Yes gambling. Some have declared it illegal lotteries. Some have it only legal for 501c3's, some have it legal for everyone. Raffles are usually governed by a particular department of the state government that, while varying from state to state, is almost always overseen by the state attorney general, and almost always requires that you file for (and pay for) a raffle license. Often there is a waiting list for this license. And you have to spell out in explicit detail what the proceeds will go to - and you often have to put specific terminology on the tickets with the contact numbers for the attorney general's office. Any little mess up could get you in real trouble. But it varies greatly from state to state. So research research research!! Make sure you know the following: 1. Is your state a state that requires you to be a 501c3? 2. Is it legal at all? 3. Do you need a raffle license? 4. Is your state a state that requires you to FIRST pay for the raffle prize, show proof of date of purchase, before you actually hold the raffle? 5. What is the EXACT wording that the attorney general requires on the tickets? How much notification time must the receiver of the tickets have between the ticket "drop date" (the day they get them in hand via mail or otherwise) and the day of the raffle? 6. What is the EXACT procedure for claiming the proceeds? 7. Where is the EXACT location that the raffle drawing needs to be held? For instance, in many states, the county you actually get the license in is the exact county you must draw the ticket from. You need to physically be there. 8. Do you need a witness/notary at the drawing? Make sure, after you have done all this, that you choose an actual professional printer to print the tickets - one who has done the tickets for other organizations and know exactly what to write. Take no chances in raffles. Messing up on a raffle is just like under the table sports betting, and it is drastically frowned upon by the IRS. Take care - and be careful! Sorry for my paranoia!
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