Tax rules for veterans organization silent auctions

The question that decides everything else

Which entity is running the auction? In most veterans organizations there are several sharing an address, and they hold different exempt statuses under different sections of the code.

• The post — commonly organized under the section covering veterans organizations rather than as a public charity
• The auxiliary — usually a separate corporation with its own EIN and its own status
• A relief fund, foundation or charitable arm — where one exists, often the entity with public-charity status

Do not rely on what everybody at the post knows. Look up each entity's own determination letter, confirm which section it is exempt under, and put the answer on the auction page in plain words.

Why the section matters to your bidders

Deductibility of a contribution depends on the recipient organization's status, and the rules for veterans organizations differ from those for public charities — in some cases with conditions attached, such as membership composition. A bidder who assumes a deduction and does not get one is a bidder you lose, and a business that assumes wrongly is worse.

The practical rule: state on the auction page which entity is receiving funds, what its status is, and what a bidder can and cannot claim. If you are not certain, say that you are confirming it rather than guessing in the donor's favour.

The fair market value disclosure

Where the receiving entity is a qualifying charity, a bidder may deduct only the amount paid above an item's fair market value, and you are required to disclose that value at the time of the transaction. Put it on every item page. It also helps the auction: a stated value gives bidders a reference point to bid past.

Moving money between the entities

If the auxiliary raises funds for a post purchase, or the post raises for the relief fund, that transfer is a board decision recorded in minutes and it may have its own considerations depending on the entities' statuses. Agree the mechanism before bidding opens. Discovering it afterwards is the most common avoidable problem a post runs into.

Donated items

Acknowledge in writing what a business gave without assigning it a value — that is the donor's responsibility. State the receiving entity and its status in the acknowledgement so the business is not misled.

Raffles

Raffle purchases are generally not deductible at all, and raffles are a licensed gaming activity in most states. For a post that already holds a gaming licence there is more at stake than the deduction — see gaming licences and emblems.

General information, not tax or legal advice for your post. Rules vary by jurisdiction and change — confirm with your department and your gaming officer before you act on anything here.