Oh, BINGO. It seems so harmless and innocent, yet it can cause so many headaches for nonprofits. If you have ever seen the IRS application for nonprofit status (consult Form 1023-EZ’s instructions), you may have noticed that it asks whether your organization will be conducting BINGO games. Perhaps you wondered, “What an unusual question. Why do they care?” Well, they care because your BINGO games could jeopardize your organization’s nonprofit status, give rise to tax liability or employment law issues, create reporting obligations, and generate unrelated business income, to say nothing of running afoul of state and local laws.
For guidance on federal issues, the IRS has produced an in-depth but easily-understood guide, Tax-Exempt Organizations and Gaming. Any nonprofit engaging in BINGO fundraisers should consult it. The guide is full of real-life examples that will help you to understand how to keep your organization in the clear.
If you are in the Pittsburgh area, the Allegheny County Treasurer is likely your local authority on running BINGO games, and you will need to consult their website’s chart of licensing requirements and fees before completing an application for a license. If you read my last post on raffles and 50/50 drawings, you may recall that organizations must have been fulfilling their exempt purpose(s) for at least one year prior to applying for that type of license. The BINGO license requires applicants to have been operating in accordance with their organizational bylaws for two years and they must prove that they have registered with the Commonwealth of Pennsylvania. There is, however, an exception for senior-citizen groups, which can apply immediately upon recognition. Also, the license is free for qualified nonprofits operating BINGO games solely for their membership’s entertainment and providing only nominal prizes.
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Please note: This blog is intended as general educational information only, and should not be considered legal advice or a substitute for consulting a lawyer.