Tax-Exempt
Saturday night bingo in the church hall, one-armed bandits in the social club, video lottery at the veterans’ club, poker night at the fraternal lodge – all of these are examples of gaming* – sometimes called gambling – by organizations exempt from federal income tax.
For many years now, exempt organizations have operated these and many other types of games as a part of their activities. Why do organizations “game?” Probably the number one reason is to raise funds – either to help cover the cost of running their organizations or to support worthy causes. For some organizations, gaming also permits its members to socialize with each other and fosters fellowship.
Whatever the reason, an organization conducting any type of gaming should understand how the activity can impact its federal tax-exempt status, as well as its tax and information reporting responsibilities. In the following chap-ters, this publication will provide an exempt organization – whether it is run-ning games already or deciding whether to start – the information it needs to operate in a manner that will not jeopardize its exempt status or generate unexpected tax bills.
Note: Many states and localities regulate gaming by exempt organizations. This publication does not address state or local gaming licensing require-ments. For licensing requirements, please consult the appropriate agencies in your locale.
*Gaming includes (but is not limited to): bingo, pull-tabs/instant bingo (including satellite and progressive bingo), Texas Hold-Em Poker and other card games, raffles, scratch-offs, charitable gaming tickets, break-opens, hard cards, banded tickets, jar tickets, pickle cards, Lucky Seven cards, Nevada Club tickets, casino nights, Las Vegas nights, and coin-operated gambling devices. Coin-operated gambling devices include slot machines, electronic video slot or line games, video poker, video blackjack, video keno, video bingo, video pull-tab games, etc.
