Rationale

The Indiana University Alumni Association (IUAA) acknowledges that allowing alumni communities to conduct events at which prizes or awards of a certain value are allowed will encourage attendance and participation in IUAA programs and activities. However, the IUAA recognizes that issues of appropriateness, reasonableness, fairness, and liability may arise with all games of chance and drawings, and seeks to minimize those concerns with the following guidelines: limiting the dollar amount for prizes offered at such events, requiring additional approvals for events at which higher-value prizes will be awarded, and establishing reporting requirements to ensure compliance with applicable IRS regulations.

The IUAA and its alumni communities operate throughout the nation. Because some state laws require organizations that conduct charity gaming and raffles to acquire a gaming license and to comply with substantial record-keeping requirements, the IUAA has determined that the potential liability and administrative burden of allowing charity gaming or raffles at IUAA programs and events outweighs any potential return from these activities.

All IUAA alumni communities are strongly encouraged to honor this policy. Failure to do so could put IUAA and its other alumni communities in violations of federal, state, or local laws.

Policy

Drawings and Other Games of Chance

IUAA and its alumni communities may conduct drawings or other “games of chance” to encourage attendance or participation in events or activities if (a) the value of any prize offered does not exceed $300, and (b) the total value of all prizes offered at any event does not exceed $1,500. Vendors participating in an IUAA event are also subject to the prize limits.

In rare circumstances, a request may be made to award prizes with values that exceed the amounts identified above. These exceptional requests must be submitted as proposals and obtain approval from the IUAA executive director.

Raffles, as defined below, are prohibited. Bingo and poker and other similar games are prohibited if any prizes are awarded.

Prizes

The value of a prize awarded through a drawing or contest is considered taxable income to the recipient and may require IUAA to report the value of the prize to federal and state revenue agencies.

Awards

Awards given as a result of services performed are considered taxable for both income and

employment tax purposes. Awards given for recognition of achievement are considered taxable for income tax purposes only. However, if an IU faculty or staff member receives recognition for his or her work, the award is considered for tax purposes to be for services performed and not recognition of achievement.

Gifts

Gifts awarded by IUAA and its alumni communities may be taxable income to the recipient. The value of any single gift offered should not exceed $300.

In rare circumstances, a request may be made to award gifts with values that exceed $300. These exceptional requests must be submitted as proposals and obtain approval from the IUAA executive director.

Procedures

1. The value of a prize, award, or gift is considered taxable income to the recipient and may require IUAA to report the value to federal and state revenue agencies. Therefore, alumni communities must complete the IUAA Prize, Award, or Gift Tax Data Form. If the recipient is an employee or student with a 10-digit university identification number, only the Prize, Award, or Gift Tax Data Form needs to be submitted. If the recipient is not an employee or a student with a 10-digit university identification number, the alumni community must also collect an IRS Form W-9.
2. Completion of the Prize, Award, or Gift Tax Data Form is not required for prizes, awards, or gifts valued at $100 or less.
3. Participants should be notified of the potential tax consequences of accepting the prize, award, or gift.

Definitions

IRS Form W-9 – Request for Taxpayer Identification Number and Certification

IRS Form W-8BEN – Certification of Foreign Status of Beneficial Owner for United States Tax Withholding.

Contest – A competition for a prize involving actual skill or criteria for winning that is different from a drawing based on luck, such as an academic based contest

Drawing – A game of chance where the prize is awarded based on participation or attendance, such as a door prize

Giveaways – Items of nominal value ($10 or less) provided to everyone participating or attending an event.

Prizes, Awards, or Gifts – Include cash, cash-equivalents (such as gift cards), tangible personal property, and complimentary services.

Raffle – The selling of tickets or chances to win a prize awarded through a random drawing. (I.C. 4-32.2-2-26) Value – Shall be the fair market or retail value of a prize, regardless of whether the prize is purchased by IUAA, donated, or furnished by an external entity.