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Nonprofit Law/does 501c3 need to submit 1099 for gifts/grants it makes to an individual?


Our nonprofit provides funds to individuals who are suffering from a hardship or crisis. They range from $1,000-$10,000. Are we supposed to do a 1099 for these grants? No services are exchanged. These "grants" require no repayment. I had assumed these would be considered "gifts" by the IRS, and since under the $14,000 threshold are not taxable. But now my accountant is telling me I need to file 1099-Misc forms for these.

You are correct.  Gifts are not reportable to the IRS.

In a Private Letter Ruling in 1993 the IRS concluded that a charity
need not issue a 1099 form to a beneficiary of its charitable
services. A nonprofit agency provides transportation to
developmentally disabled persons and other qualified persons, such
as family members, to enable treatment or rehabilitation of
disabled persons. It also provides respite care, which is temporary
or periodic care to relieve the persons normally responsible for
caring for disabled persons. The charity asked the IRS if it needed
to issue 1099 forms to those persons who received free
transportation or respite care. The IRS observed that section 6041
of the Internal Revenue Code specifies that an organization
generally must issue a 1099 form if it is engaged in a trade or
business and pays another person in the course of that trade or
business at least $600 of income during the calendar year. Section
1.6041-1(b) of the income tax regulations provides, in part, that
section 6041(a) of the Code applies to organizations whose
activities are not for the purpose of gain or profit (such as a
church or other charity). The IRS concluded that since "the value
of the transportation and respite care in issue is excludable from
the gross income of the recipients of these services, we conclude
that the nonprofit agency need not make information returns to

It is important to note that pursuant to 26 USC 6110(k)(3) such
items [private letter rulings] cannot be used or cited as

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


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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