Friday April 26, 2024

Rev. Proc. 92-49
GiftLaw Note: The guidelines for premiums transferred by charities to donors were set forth in Rev. Proc. 90-12. However, there was no discussion of items that were offered free to donors. This ruling creates a safe harbor for low-cost articles that are sent without the request of a donor.

If a charity distributes unordered items to donors with a request for a gift, those will come within the "low-cost article" exclusion. The articles would be expected to have the logo or identification of the charity on the item, and must cost less than five dollars (adjusted for inflation).
REV. PROC. 92-49, 1992-1 C.B. 987

SECTION 1. PURPOSE


This revenue procedure amplifies Rev. Proc. 90-12, 1990-1 C.B. 471, by providing additional guidelines for charitable organizations engaged in fundraising activities. These additional guidelines generally provide that when charitable solicitations are accompanied by free, unordered, low cost items, the benefits are considered to have insubstantial fair market value, and the charity may advise potential contributors that the full amount of a contribution is deductible under section 170 of the Internal Revenue Code.

SEC. 2. GUIDELINES


.01 The following guidelines in new subparagraph (c) are added after subparagraph (b) of paragraph 2 in section 3.01 of Rev. Proc. 90-12: (c) The fund-raising campaign meets the following two requirements:

(1) The charity mails or otherwise distributes free, unordered items to patrons. To meet this requirement, any item received by a patron must not have been distributed at the patron's request or with the express consent of the patron. Any item distributed must be accompanied by a request for a charitable contribution and by a statement that the patron may retain the item whether or not the patron makes a contribution,

(2) The cost (as opposed to fair market value) of all such items, in the aggregate, distributed by or on behalf of the organization to a single patron in a calendar year is within the limits established for "low cost articles" in section 513(h)(2) of the Code.

.02 The other requirements of Rev. Proc. 90-12 must be followed, including the requirement in paragraph 1 of section 3.01 of Rev. Proc. 90-12 that a patron's payment to the charity must occur in the context of a fund-raising campaign in which the charity informs patrons how much of their payment is a deductible contribution.

SEC. 3. CONFORMING CHANGES


.01 The following conforming changes are made to paragraph 2 in section 3.01 of Rev. Proc. 90-12.

(1) A semicolon is substituted for the comma before the word "or" at the end of subparagraph (a);

(2) The word "or" is deleted at the end of subparagraph (a); and

(3) A semicolon followed by the word "or" is added at the end of subparagraph (b).

.02 The phrase "subparagraphs (b) and (c)" is substituted for the phrase "subparagraph (b)" in sections 3.04 (fifth sentence), 3.06 (first sentence), and 3.07 of Rev. Proc. 90-12.

EFFECT ON OTHER DOCUMENTS


Rev. Proc. 90-12 is amplified.



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