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1099 for Silent Auction?

  • 1.  1099 for Silent Auction?

    Posted 05-20-2021 02:36 PM

    Hi all,

    Can anyone point me to documentation that shows you do NOT need to provide a 1099 for every silent auction item 'won' over $600?  Finance is asking us to collect appropriate information (including SSN) for any bidders who 'win' an SA item valued $600+ at our gala. I know this isn't the case, but I'm not winning this conversation.  I've tried explaining that SA items are not a prize the donor is winning, but I'm in need of additional 'proof' to steer this conversation.


    Thanks!

    Steph Williams
    Database Administrator
    MN Adult & Teen Challenge



    ------------------------------
    Steph Williams
    DBA
    MnTC
    ------------------------------


  • 2.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 02:42 PM
    It is hard to prove something that doesn't exist.

    No one is winning anything here.  This is not a lottery or raffle.  It is a charity auction where the winning bidder receives something of value in exchange for their gift.  Following IRS guidelines, these winning bidders intentionally pay over FMV (we hope) to make a voluntary charitable contribution.  The only IRS documentation they need is a quid prop quo receipt.  Here's the IRS reference:


    If, however, you are conducting a lottery or raffle and the winner receives cash or product valued at over $600, a 1099-G might very likely be required.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987






  • 3.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 02:51 PM

    Thanks, John. That's exactly the issue I'm running into.  I'm struggling with how to effectively push back on the idea of collected SSNs from so many of our auction purchasers.  Our VP is interpreting 'prize' to include those auction items. 

    The only place I could see this potentially existing is if someone wins an SA item for $600+ less than FMV? (i.e. winning bid on a $1000 bike is $250.)  - even then, though, is a 1099 required?

     

    We have the raffle portion covered. (we will withhold tax and issue appropriate forms for that.  It's a nearly $30,000 car raffle.) 

     

    Steph Williams

     

    Database Administrator | Minnesota Adult & Teen Challenge

    p: 612.238.6108  |  c: 612.720.3862

     

     

    Support freedom from addiction at: www.mntc.org/donate-now

     






  • 4.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 03:11 PM
    No one is winning anything.  They are making a purchase.  Even if they pay below FMV they have bought something and it has been agreed to sell it below value.

    The only thing your Business Office must be concerned with is paying the associated sales tax for these purchases.  Those taxes usually come out of the auction proceeds and not paid by the buyer.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 5.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 03:27 PM
    Hi Steph, 

    Is it possible that your VP is confusing a silent auction where the highest bid wins with one where all bids are the same amount and a raffle is held to determine the winner? 



    Thank you,
    Isaac Shalev
    CRM Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:







  • 6.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 03:35 PM

    Hey Isaac,

     

    Unfortunately, no.  We're definitely talking about the same silent auction style.  She's insisting that if the winning bidder "wins" and gets the item for $600 or more under FMV, we need to provide them with a 1099. 

     

    Steph Williams

     

    Database Administrator | Minnesota Adult & Teen Challenge

    p: 612.238.6108  |  c: 612.720.3862

     

     

    Support freedom from addiction at: www.mntc.org/donate-now

     






  • 7.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 03:46 PM
    Then rather than you disproving something you cannot, ask her to show you, in writing, where the IRS states that winning bidders in sanctioned charity auctions (share the link I provided) must be issued a 1099.  Nowhere in that IRS discussion is there a reference to a game of chance.  Only bidding on items with the purpose of making a charitable donation.

    John

    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987







  • 8.  RE: 1099 for Silent Auction?

    Posted 05-20-2021 06:16 PM
    Best bet may be to do a call with your VP and the IRS then.