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Are Donations Legal To Accept?


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#1 dalesellers

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Posted 04 March 2004 - 01:49 PM

I posted a simlar question a while back, but I never got anywhere with it. I got some new ideas, so I thought I'd try again. Here's the situation: I'm interested in setting up PayPal account on our site so that we can receive donations from people who want to be able to support us (for site development, outreach services, etc). Is this legally possible?

From what I have researched about the United States (especially the State of Florida), it’s a third degree felony to solicit fundraising support from the public without first getting registered with the Department of Agricultural and Consumer Services (which is a lot of red tape to go through).

When you have a PayPal account on your site for the purpose of accepting donations, is this considered soliciting donations from the public?

One friend I have said he thinks it’s legal, but only if you do it in a “membership only” arrangement. In other words, the donations can only be taken in a way that reflects an organizational focus rather than from just "the general public." So I guess if you have a part of your site that the same people are consistently coming to, like in the case of e-mail subscribers coming to a part of your site when notified, then this might make it legal. Anybody got any suggested guidelines for this scenario? Any insights greatly appreciated.

Dale

dale@holisticempowerment.org
www.holisticempowerment.org


#2 PayPalStephen

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Posted 22 November 2004 - 04:56 PM

Hello,

I do not know the laws for donation in your situation. You could always provide a newsletter via email for an ongoing subscription or one time payment. You can always review our sellers protection to get more information: https://www.paypal.c...ections-outside

Stephen Ivaskevicius
PayPal/eBay, Inc.
www.paypal.com/pdn

#3 tony_1

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Posted 05 December 2004 - 10:55 PM

<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica" id="quote">quote:<hr height="1" noshade id="quote">Originally posted by dalesellers
[br]I posted a simlar question a while back, but I never got anywhere with it. I got some new ideas, so I thought I'd try again. Here's the situation: I'm interested in setting up PayPal account on our site so that we can receive donations from people who want to be able to support us (for site development, outreach services, etc). Is this legally possible?

From what I have researched about the United States (especially the State of Florida), it’s a third degree felony to solicit fundraising support from the public without first getting registered with the Department of Agricultural and Consumer Services (which is a lot of red tape to go through).

When you have a PayPal account on your site for the purpose of accepting donations, is this considered soliciting donations from the public?

One friend I have said he thinks it’s legal, but only if you do it in a “membership only” arrangement. In other words, the donations can only be taken in a way that reflects an organizational focus rather than from just "the general public." So I guess if you have a part of your site that the same people are consistently coming to, like in the case of e-mail subscribers coming to a part of your site when notified, then this might make it legal. Anybody got any suggested guidelines for this scenario? Any insights greatly appreciated.

Dale
<hr height="1" noshade id="quote"></blockquote id="quote"></font id="quote">

i would not think so since your not a "charity" and your not forcing them to donate. the donate button is there for if they would like to contribute then can.

#4 smcone

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Posted 17 December 2004 - 11:13 PM

You might want to use a search engine for information on the IRS
definition of tax exempt versus non-tax exempt charities.

Under US Federal law if you are not a registered tax-exempt charity,
and you "ask", or solicite in any way (eg. Paypal Donate button)for
a donation, then you MUST put a clearly worded statement indicating
that you are not a registered charity AND that ANY and ALL donations
made to you are NOT tax deductible. Failure to display this
statement is going to get you into big trouble if someone gives
you a sizable donation and then lists you as the "charity" on
his/her Federal income tax form and gets audited.

The IRS has taken the view in the past, then when a person "sees"
the word donation, then that person "assumes" that he or she
can list it as a deduction on their tax returns.

Also any "donations" received by you are fully taxable at the
federal level and possibly at the state level as "ordinary income".
In other words, it is income that has to be reported on your
tax return, I believe under "W-99 misc. income".

If in the course of a tax calendar year, if you actually get some big bucks through donations, then you might have to keep records of
the people that made the donations for tax-related support.
This is usually true if you are a business and filing a
Schedule C to and trying to offset donation income against deductions.
Also, there are "money-laundering" statues in effect when it comes to
the reception of large total sums of "anonymous" donations.

I have YET to see any site with the Paypal Donate button
include even the leanest required legal disclaimer indicationg
that they are not a registered charity and/or that the donation
is not tax deductable.

Oh yes, there is always something....
If a person gets anything of tangible or intangible value
for placing a donation, then the value of that item or service
is NEVER allowed as part of a charitable deduction.

EXAMPLE: I pay $55.00 per year for my Elks membership,
and they give me a monthly Elk's member magazine.
The Elks are a registered charity under federal law.
I am allowed to deduct $40.00 for the donation. The magazine
they send me has a delcared value of $15.00 per year
(based on federal guidelines of "fair value".
Thus I can't include $15 of my yearly membership because they
are "giving back" $15.00 worth of goods to me.

Hope this helps a little.

Steven Carlozzi
www.smcelectronics.com



#5 smcone

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Posted 07 September 2005 - 08:33 PM

Last I heard, when someone gets a "tip" or a gratuity,
he or she must report it as income.

Ask your local waitress at a restuarant or a bartender
or better yet, ask the Owner of the bar or restuarant
if those tips aren't considered income by the IRS.

The only reason why a service employee is allowed to be paid
less than minimum wage is that the tips are added to his meager hourly
wage and the IRS and State government expect wages + tips to equal
the minimum wage.

It's like I said in my earlier post, all of these "donations"
are considered income by the IRS, whether or not taxes are due
is based on each individual's situation. It's pretty much like trying to explain that all the winnings made on those little $1.00 lottery
scratch tickets are also considered income. Most State Governments
do little to check to see if they are getting claimed as income,
but most States will not pay out any winnings greater than a
few hundreds of dollars before they require YOU to come to the
State Lottery Office in person and claim your winnings,
in which they usually subtract the State and Federal Income
Taxes right on the spot.

It's like the little shoplifter Winona Ryder once said
many years ago..... Reality Bites.

Steven Carlozzi-owner
www.smcelectronics.com





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