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Should You Print Auction Item Values in Your Catalog?

April 04, 2012 | Comments: 0 | Views: 137

A hotly debated topic is whether your benefit auction committee should print item values in the auction catalog. Let's preface this discussion with quick story and caution.

During tax season, I saw a television ad by a tax preparation company confidently stating that their tax professionals would be able to find deductions overlooked by your previous tax preparer.

If you've ever talked with more than one tax expert, you probably noticed that each one has a different interpretation of what you can and cannot do, legally.

I share this because as we delve into the issue of whether you should or should not list item values in your nonprofit auction catalog, remember that 1) your nonprofit's bookkeeper might recommend something different than what I am about to share, 2) I'm not a tax expert, and 3) tax law changes frequently. Depending on when you read this article, it might be outdated!

The topic of whether to print item values in the auction catalog often leads to deep discussions.

The argument against listing item values is two-fold.

1. Some auction items have a straightforward value. The home rents for $750. That bottle of wine retails at $60. This electronic toy sells for $500. Naysayers of printing item values are concerned that guests won't pay more for that trip / wine / toy than the printed value.

2. If an item's value is attributable to the intrinsic worth of the experience - a la "Headmaster for the Day" or "Lunch with the Mayor" - the committee's debate rages. Oftentimes groups resort to labeling these as "priceless" rather than list a $0 value.

From courses I've taken, my understanding is that the IRS wants nonprofits to list the value of donations in their benefit auction catalog or some other location (perhaps a PowerPoint slide or table display) that can be viewed by the bidder before he decides to bid. Failure to comply could mean that - if caught - the nonprofit (not the audited taxpayer) would pay the tax, interest, and penalty on any deduction unfairly taken by a taxpayer.

Some groups believe they comply with the regulations by putting the value of the auction item on the receipt. Yet this means that the winning bidder officially learns of an item's value after he raises his hand, bids, and buys, thereby not meeting the IRS requirement.

Beyond laws, let's consider one perk to listing values in a catalog: education.

An informal survey among my bidders suggested that many tend to underestimate values. So one advantage to listing auction item values could be that guests begin to understand what those trips, baskets, and experiences really cost.

For the latest rules and official information around non-profit auctions in the USA, visit the IRS website.

Meanwhile, get those item values in your benefit auction bidders hands, prior to the bidding action.

Fundraising auctioneer Sherry Truhlar has been featured in Town & Country, The Washington Post Magazine and on E! Style and TLC shows for her trend-setting work with school and nonprofit auctions. Her classes and tools are used by hundreds of charities to improve their bottom-line auction results. To amplify your auction, enjoy her annual Auction Item Guide TM listing 100 items that sold for over value in auctions last year. Get your FREE Guide at

Source: EzineArticles
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