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Nonprofit Law/Recipients of Benefit required to submit 1099


If a business undertakes the task of organizing and conducting a benefit to raise money for medical bills for a community member, seeking donations from the public and opening the benefit to the public, should the recipient of the money raised be required to fill out a W-9 prior to disbursement of the funds that were raised?  Does the business have any obligation to the donors?  Should money donated in check form have been made payable to the business rather than the fund set up for the recipient?
For clarification, here is an edited copy of the ad that was run in our local newspaper. (I have removed the private information)

(Name of Event): A benefit for (Recipeints name)  fight against leukemia, 11 a.m.-2 p.m., Saturday,  (date)     at (local location)  Ranch,  (   a d d r e s s     ) .   Hayrides, games for kids, lunch, silent auction, photos with Ms. (local celebrity)  and more. Event is free but donations are appreciated. Organized by (local business name and phone number).

Thank you for your time and input.

I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. Your question does not involve a 501(c)(3) organization.  But I will inform you that the Internal Revenue Code at section 102(a) provides that  gifts are not income.  "Gross income does not include the value of
property acquired by gift..."

Therefore, the business may give funds to an individual and there is no tax consequence and no tax forms or reports to be filed.  However, section 102(c) of the Code has "Subsection (a) shall not exclude from gross income any amount transferred by or for an employer to, or for the benefit of, an employee...."  Therefore, if the recipient is part of the family of an employee of the for-profit business, there are tax consequences.  You did not put in the facts anything about an employer-employee relationship, so I will not go further with that.

The for-profit business would also need to consider your state's charitable
solicitation regulations.

Harvey Mechanic, Attorney at Law -

P.S. This response is intended to be a general statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

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Harvey Mechanic


DO NOT GIVE ME INFORMATION THAT YOU WANT KEPT CONFIDENTIAL. I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "" without the quotes and then add your search terms before hitting enter.


I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.


B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.

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