QUESTION
Are there any legal requirements to call something a donation?
Asked on Nov 04th, 2012 on Taxation - California
More details to this question:
I am going to be starting a Council on World Poverty, and part of that Council will involve helping impoverished people out of poverty by giving them a business model to work on. Part of that money is going to be given to the people we are working with, part to the council, and part to me to sustain myself. Is it legal to call the money we bring in a "donation?"
8 ANSWERS
Probate Attorney serving St. Louis, MO
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Edward L. Armstrong, P.C.
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All I will say about this right now is if you are soliciting contributions and you want to tell your donors they are tax deductible, you must first apply to the IRS to become a Section 501(c)(3) organization or create a private foundation. There are some stringent rules on how money is used, etc.
Answered on Nov 08th, 2012 at 2:42 AM
There are many state and federal legal requirements to call something a donation. You can not simply accept money for a worthy cause and call it a donation. You must set up a non-profit corporation in the state of Washington, file certain legal documents, get certain licenses and then file for non-profit status with the Internal Revenue Service, where you must also get certain licenses. It is very involved. In short, NO - you can not just call the money you bring in a "donation". You must file the applicable state and federal forms and get the applicable licenses.
Answered on Nov 06th, 2012 at 5:28 PM
Trust Attorney serving Cincinnati, OH
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Paul A. Nidich Attorney at Law
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No. "Donation" as you are using the word, suggests that the donor is going to get a charitable deduction for the amount donated. Donors can get charitable deductions for their charity only from organizations that have tax-exempt, 501(c)(3) status with the Internal Revenue Service.
Answered on Nov 06th, 2012 at 4:47 PM
To call something a "donation" simply requires donative intent on the part of the giver. That does not mean it is tax deductible. To make a donation tax deductible, you would have to file a special form and have the IRS declare you to be a tax exempt organization.
Answered on Nov 06th, 2012 at 4:41 PM
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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You can call money given to your organization a donation, but it is not a charitable contribution, and you cannot represent that it is deductible for any tax purposes.
Answered on Nov 06th, 2012 at 4:41 PM
Tax Attorney serving Portland, OR
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Bullivant Houser Bailey PC
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Not without some changes. To solicit donations, you have to register as a charity with the Oregon Secretary of State's office; the charity also should apply with the IRS for recognition of tax exempt status. Although a qualified charity can pay a reasonable compensation to its employees for their services, it cannot pay more than reasonable compensation without subjecting both to potential liability.
Answered on Nov 06th, 2012 at 4:41 PM
Appellate Attorney serving Grosse Pointe Farms, MI
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Musilli Brennan Associates, PLLC
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It is clearly all a donation, but you will have to qualify for tax deductable status with the IRS.
Answered on Nov 06th, 2012 at 4:41 PM
Business Law Attorney serving Sacramento, CA
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Williams & Associates
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By asking whether there are any legal requirements to calling something a donation, I believe you are asking whether there are requirements for a gift to your group can qualify as a tax deductible donation. Whether a donation is tax deductible is governed by Section 170 of the Internal Revenue Code. In order for a donation to your group to be tax deductible, your group would need to be one of the types of organizations set forth in Section 170(c). The most common way to satisfy the requirements of Section 170(c) is to form a non-profit corporation under the law of your state and file for a federal tax exemption by using IRS Form 1023. In addition to the requirements for federal tax, you should be aware that many states, including California, also require tax filings and have additional requirements for fundraising (i.e. seeking donations).
Answered on Nov 06th, 2012 at 4:24 PM