The Chesapeake Climate Action Network’s (CCAN) “Climate Tesla” Raffle is held in Montgomery County, Maryland and governed by Article 27, Section 255B, of the Annotated Code of Maryland and Montgomery County regulations.
These are not the only laws and regulations that govern raffles. For example, for further information about raffles and federal taxation, consult IRS Notice 1340 Tax-Exempt Organizations and Raffle Prizes.
Chesapeake Climate Action Network (CCAN), its members, officers, directors, agents, and representatives and their parent organizations, affiliates, subsidiaries, vendors, and advertising and legal advisors are not responsible for and shall not be liable for: (i) late, lost, delayed, damaged, misdirected, incomplete, illegible or unintelligible entries; (ii) failed, returned, or misdirected notifications based on inaccurate information provided by the entrants or winner; (iii) telephone, electronic, hardware, or software program, network, internet, or computer malfunctions, failures, or difficulties resulting from participation in this Raffle or otherwise; (iv) any condition caused by events beyond the control of CCAN that may cause the Raffle to be disrupted or corrupted; or (v) any injuries, losses or damages of any kind caused by a prize or resulting from acceptance, possession, or use of a prize, or from participation in the Raffle. CCAN reserves the right, at its sole discretion, to cancel, terminate, modify or suspend the use of the software version of the raffle and instead conduct a non-electronic raffle.
Other local, state and federal laws and regulations may apply.
Persons Allowed to Purchase CCAN’s Climate Tesla Raffle
You must be at least 18 years old to purchase a raffle ticket. People under age 18 cannot purchase raffle tickets. Nor may persons under 18 years of age be the beneficiary of a ticket purchase.
Ticket purchaser — and beneficiary, if the beneficiary is not the same as the purchaser — must also be citizens of the United States or legal residents thereof.
Ticket purchaser — and beneficiary, if the beneficiary is not the same as the purchaser — must meet the following eligibility requirements:
No board member or employee, or immediate family member of a board member or employee, of Chesapeake Climate Action Network shall be permitted to purchase tickets to the raffle or win the prize. For purposes of this Raffle, “Immediate family” is defined as the board member/employee and his/her spouse, and their parents, children, brothers, and sisters.
While neither Maryland nor Montgomery County law compels this rule, our intent in creating and enforcing it is to avoid the creation of a conflict of interest or even the appearance of a conflict of interest.
The raffle is not available to people in Alabama, Arkansas, California, Hawaii, or Utah.
CCAN Filings, Certificate, & Permit
Chesapeake Climate Action Network, Inc., is a Maryland nonprofit based in Montgomery County, Maryland. It is in good standing with the Maryland Department of Assessments & Taxation.
CCAN has received its 501(c)(3) approval letter from the US Internal Revenue Service. (CCAN also has a 501(c)(4) status affiliate, CCAN Action Fund, but this has no relevance for this raffle. Please contact us if you would like to donate funds to our 501(c)(4).)
CCAN possesses a Certificate for Solicitation from the Office of the Secretary of State that is current through May 15, 2019 and CCAN will renew this licenses before it expires.
CCAN has obtained the necessary permit for conducting a raffle in Montgomery County, MD.
You may contact CCAN as follows:
Mike Tidwell
Executive Director
Chesapeake Climate Action Network
6930 Carroll Avenue, Suite 720
Takoma Park, MD 20912
mtidwell@chesapeakeclimate.org
Raffle Ticket Tax-Deductibility
Raffle tickets are NOT tax-deductible, even when the raffle is being held by a tax-deductible organization.
Disclosures
We are providing the following disclosures in order to give people relevant information about the Climate Tesla Raffle.
A full and fair description of the prize
CCAN’s Climate Tesla Raffle has one prize with two components: (a) A Tesla Model 3 under the current ownership of CCAN; and (b) backup withholding federal tax payments made on behalf of the Prize Winner so that the Prize Winner does not have to provide that money, which is normally required in advance of receiving the Prize. The Prize Winner will be responsible for tax payments to the state of Maryland. This state tax payment is required to be remitted to CCAN in advance of receiving the Prize.
Federal Tax Payments are Part of Prize; State Tax Payments are Not
- Chesapeake Climate Action Network, Inc., is a nonprofit incorporated in Maryland with its headquarters located in Maryland. The Raffle takes place in Montgomery County, Maryland.
- According to Maryland law, prize winnings of more than $5,000 are subject to withholding for both federal and state income tax purposes.
- Both residents and nonresidents of Maryland are subject to Maryland income tax on their winnings.
- Maryland taxes will be withheld at a rate of 8.75% on a resident’s winnings. For a nonresident, the withholding rate is 7%. Personal tax tip #59: Gambling Winnings and Your Maryland Tax Obligations.
- The IRS federal tax rate is 25%. See IRS Notice 1340 Tax-Exempt Organizations and Raffle Prizes.
Furthermore, if CCAN pays these withholding taxes on behalf of the Prize Winner, the payments themselves are treated as income to the Prize Winner. Therefore, CCAN will “gross up” each payment to account for the taxes required on the payment itself. Further, from the perspective of the State of Maryland, the payment that CCAN makes to the Internal Revenue Service is additional taxable income. CCAN “grosses up” both payments until the calculations yield zero additional required dollars.
Climate Tesla Raffle Prize Description
CCAN’s Prize consists of (a) a Model 3 Tesla with Mid Range Rear-Wheel Drive and an All Black Premium Interior worth US$46,000; and (b) a payment of US$15,180 to the Internal Revenue Service for the backup tax withholding required for this Prize.
The total expenditure by CCAN on the Climate Tesla Raffle Prize is worth US$61,180.
The Prize Winner will be responsible for paying Maryland state taxes on the $61,180 prize, which is $5,353.25 for Maryland residents and $4,282.60 for nonresidents of Maryland.
Cash-out is not an option as CCAN already holds the title to the car.
Any and all additional taxes, fees, assessments or payments of any kind to any organization whatsoever, including but not limited to the IRS and/or the Prize Winner’s state or local authorities, beyond the amounts listed in this section are the sole responsibility of the Prize Winner.
It is CCAN’s intent that each Prize will be delivered within the 2019 tax year and will be accounted for as a 2019 transaction. Prize Winner is responsible for submitting IRS 5754 to CCAN as well as remitting taxes to CCAN for CCAN to remit to the state.
The vehicle is being stored in a covered garage in Montgomery County, MD. Prize Winner is responsible for arranging delivery of the vehicle.
Incentives
The federal Electric Vehicle tax credit does not apply to this Tesla since it was donated by a CCAN board member. The tax credit was applied to the board member. In some States, Electric Vehicle incentives may include reimbursement for charging infrastructure or non-cash incentives such as access to HOV lanes.
All Other Payouts Disclaimed
The Prize Winner is responsible for any and all other expenses related to the Prize, including but not limited to, additional taxes subject to the individual’s particular circumstances, local taxes, title and registration fees, attorney and tax preparation fees, and so on.
The appraised value of the prize
The value of the Prize is is US$46,000. CCAN will make withholding tax payments to Internal Revenue Service of US$15,180. The total of these two items is US$61,180. No further analysis or appraisal is required.No further analysis or appraisal is required.
If there is a minimum number of tickets to be sold; what the minimum is and the procedure to be employed to secure a refund in the event the minimum is not reached
The minimum number of tickets to be sold is 1.
The Prize, as described above and elsewhere, will be available once the minimum number of tickets has been sold.
No refunds are planned due to failure to meet ticket sale minimums, as the minimum number of tickets to be sold is 1. If the entire raffle is canceled, CCAN will issue refunds to all ticket holders.
The maximum number of tickets to be sold
The maximum number of tickets that will be sold is 1,800.
Odds of winning depend on the number of tickets sold. If the maximum number of tickets are sold, the odds of an individual ticket winning the Prize will be 1,800:1.
The value of the prize will be treated as ordinary income to the winner for federal and state income tax purposes and that the winner may be required to pre-pay a portion of the tax liability prior to receiving the prize
All of the Prizes in this raffle will be treated as ordinary income for federal and state income tax purposes.
However, in this raffle, the Prize Winner is NOT required to pre-pay the federal portion of the tax liability prior to receiving a regular Prize. The Prize Winner IS required to pre-pay the state portion of the tax liability prior to receiving the Prize. CCAN will prepay the federal withholding tax liability for the Prize to the extent described above and elsewhere. CCAN will not pay any portion of state taxes or any additional taxes, fees or costs for any Prize beyond which has explicitly been provided elsewhere in the CCAN Rules.
The Internal Revenue Service takes the position that no portion of the ticket price will qualify as a charitable contribution for federal income tax purposes
Even though the raffle ticket is being sold by CCAN, a Maryland non-profit that has 501(c)(3) tax-exempt status, the purchase of a raffle ticket is regarded as acquiring a “thing of value.” The raffle ticket gives the purchaser a chance to win a prize. Therefore, the purchase of a ticket is not a charitable contribution for federal income tax purposes.
The drawing date for the raffle
The Climate Tesla Raffle drawing will occur at 5pm on Friday, May 31, 2019 in Takoma Park. The drawing will be conducted by the third party nonprofit fundraising platform RallyUp. RallyUp uses a computer to draw the Prize Winner at random. Raffle ticket sales will end at 4pm on May 31, 2019.
The estimated percentage of the ticket price which will be used for charitable purposes in the event that only the minimum number of tickets are sold.
The Raffle itself is used as part of CCAN’s educational mission. The Raffle raises awareness of (1) the impacts of climate change on our region; (2) efforts to fight climate change in Maryland, Virginia, and Washington, DC; and (3) the Chesapeake Climate Action Network. The Raffle has an additional desirable benefit of raising awareness of Tesla, Inc., a maker of zero-emission automobiles which demonstrate the practical replacement of traditional internal combustion engine vehicles.
In the event the Raffle sells only the minimum number of tickets (1), 100% of the proceeds will be used to cover Raffle expenses and none will be available to be used for charitable purposes.
In the event the Raffle sells 489 tickets, CCAN will have net proceeds greater than the sum of the Raffle’s expenses. From that point onwards, CCAN’s net proceeds will be used to fund its charitable and educational purposes, which are to build a diverse movement powerful enough to put our region on the path to climate stability, while using our proximity to the nation’s capital to inspire action in neighboring states, regions nationwide, and countries around the world. 100% of the net proceeds will be used for 501(c)(3)-compliant activities in support of this mission.
Depositing a ticket or any other material in connection with the raffle in the federal mails is a violation of federal law and may lead to criminal penalties.
CCAN’s Tesla Raffle will take place online and will not involve printed tickets. Mailing a raffle ticket and matters related to the raffle (including checks) is illegal under federal law and may result in criminal penalties.