Raffles & Drawings
Prior to the event taking place:
The Payroll Office needs to be informed of events involving raffles and drawings requiring a ticket purchase as soon as event details are finalized. The following will need to be submitted:
- A list of prizes & values.
- A copy of the flyer/announcement of the drawing/raffle.
- A description of how the dollar value for any non-cash items was determined.
The Payroll Office will then be able to calculate and advise of any applicable taxes that would be withheld and remitted on behalf of the winner.
What is reportable and/or subject to taxes:
Winnings of $600 or more are reportable to the IRS; this applies to a non-cash equivalent items as well as cash.
Winnings of $5,000 or more (the minimum amount is subject to current IRS regulations): taxes must be withheld by or paid to SMC and remitted to the IRS by SMC. The Payroll Office is to be consulted regarding calculation of such taxes, and will determine the amount due.
- Non-Cash Winners: will need to pay any applicable taxes to SMC prior to prize distribution. SMC will transmit the taxes to the IRS on behalf of the winner.
- Cash Prize Winners: SMC will deduct any applicable taxes from cash payments of $5,000 or more. SMC will then transmit the taxes to the IRS on behalf of the winner.
A W2-G will be issued to recipients in January of the following year, reflecting the winnings and any taxes paid.
After the winner has been selected and prior to prize distribution:
For non-cash prizes:
- Complete the "Non-Cash Prize Reporting Form". (must logged into SMC account to download form)
- Have the winner complete Form W9, sign the Reporting form, and return both to you with a check made payable to SMC if tax payment* is required. (*Calculated by the Payroll Office)
- Submit the above items to the Payroll Office.
- The Payroll Office will verify items are in order and then authorize release of the prize.
To request payment of cash prizes:
- Complete a Check Request Form, attach a copy of the event announcement and prizes offered, along with Form W9 completed by the winner.
- Submit to the Payroll Office rather than the Accounts Payable Office in this particular instance. Once approved, the request will be submitted to Accounts Payable for processing.
In the event a prize winner does not accept the winnings:
- Non-cash prize winners: the Non-Cash Prize Reporting Form is to be completed, signed by the winner declining the prize, and submitted to the Payroll Office.
- Cash winners: confirmation in writing to the sponsoring department (an e-mail is acceptable) is to be submitted to the Payroll Office.