Jim Sheenan is right, if you have a question you should contact the
authority. The IRS tax exempt line (IRS.gov/EO) -- you can even make
it anonymous.
This is only for the US, but... Cash and/or parts and/or bikes and/or
services is irrelevant. If you focus on any of those, you are missing
the whole point -- which is VALUE.
If the VALUE of what someone received from your organization exceeds
$600, then that person is a contractor which means they give you a W-9
(http://www.irs.gov/pub/irs-pdf/fw9.pdf) at the beginning of the tax
year and you give them a 1099-MISC
(http://www.irs.gov/pub/irs-pdf/f1099msc.pdf) at the end of the tax
year. If the VALUE is under $600 then you are NOT required to make
that tax declaration. Just like you aren't required to give a
donation receipt if the value is under $300 (but it is still a good
idea for recognition and the fact that the donor should declare the
value -- not the non-profit.)
--------------
Remember, in the eyes of the IRS people who donate get virtually
NOTHING in return. Otherwise it would be called a transaction instead
of a donation.
Another mental stumbling block I have after attending an IRS workshops
for non-profits was: the difference between an employee and a
contractor. The IRS answer was, "a contractor brings their own tools,
while an employee relies on the employer to provide tools." and
consequently "contractors pay ALL of their own taxes, whereas
employers are required to withhold a certain percentage of taxes for
the employee." To use an example, if you hired an electrical
"contractor" and they came to your house empty handed and expected YOU
to have multimeters, dykes, crimpers, etc.,... you probably wouldn't
think they were a contractor either. :)
So my question becomes -- if a "volunteer" comes in and works their
butt off fixing our bikes with our tools under our roof, and we reward
them in bikes/parts that exceed $600. By default did we just hire
them as an employee? If that is the case, do we need to ask them for
money so we can withhold it and use it to pay their taxes? Further
more, if they don't have any money, what do we do, use our own?
Realistically they can ask to withhold as little as possible and are
probably going to get everything back except social security, but the
employer still has to pay that amount to the IRS. So to that end are
low income people that get over $600 VALUE from a non-profit entitled
to a year end bonus brokered by the IRS? Or does this mean that the
cap for helping those in need (who can't afford to withhold any money
for taxes) is $600?
Or given that the Bureau of Labor Statistics
(http://www.policevolunteers.org/resources/references/?fa=value_vol_time)
declares that the value per volunteer hour in Utah for 2009 is $17.22
-- does that mean that I have to turn volunteers away after 34 hours
annually just to avoid this whole mess?
While I would be curious what the IRS would say, someone else can
call, my guess is that this is truly "incidental" and extremely time
consuming to audit -- so like most unenforceable laws on the books,
they would only use this to "pull you over for suspicion of something
else."
Sincerely,
Jonathan Morrison
Executive Director
Salt Lake City Bicycle Collective
2312 S. West Temple
Salt Lake City, UT 84115
w: 801-328-2453
c: 801-688-0183
f: 801-466-3856
www.slcbikecollective.org
The mission of the Salt Lake City Bicycle Collective is to promote
cycling as an effective and sustainable form of transportation and as
a cornerstone of a cleaner, healthier, and safer society. The Bicycle
Collective provides refurbished bicycles and educational programs to
the community, focusing on children and lower income households.
On Fri, Jul 16, 2010 at 6:00 AM, Davis, Andrew <ADavis@akronohio.gov> wrote:
> Not much reply.
>
> Still interested if anyone has thoughts on this topic.
>
>
>
> Andy – Akron, OH
>
> ________________________________
>
> From: thethinktank-bounces@bikecollectives.org
> [mailto:thethinktank-bounces@bikecollectives.org] On Behalf Of Angel York
> Sent: Friday, July 16, 2010 4:00 AM
> To: The Think Tank
> Subject: Re: [TheThinkTank] Work Trade / shop credit/ taxes?
>
>
>
> Andy,
>
>
>
> Did you ever find anything out about this?
>
>
>
> Angel
>
> Davis, CA
>
> On Wed, Jun 9, 2010 at 12:32 PM, Davis, Andrew <ADavis@akronohio.gov> wrote:
>
> Has anyone ever checked out the IRS regs on work trade or shop credit for
> volunteer time. We are working on a new bike co-op in town, and this
> question came up. They thought it was bartering and subject to taxes. Any
> help?
>
>
>
> Andy – Akron,OH
>
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>
>
> _______________________________________________
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