501 (c) (3) Question

[erchess]

There is a company out there that purports to sell, on a liquidation basis, a constantly changing lineup of products by catalog and a website. One "come on" is that when you register as a customer you may specify a church to receive ten percent of what you spend. Not sure if you can specify a charity other than a Christian Church and I would imagine that matters greatly. Anyway, would a Church in this situation have to pay tax on the money from this company? What if members of the church promote the whole idea among themselves and in the larger community? I am concerned about the difference between a donation and income from a business unrelated to charitable purpose.

The company in question has approached as a potential promoter of the idea a client of mine. Both of us feel that if the churches in question have to pay tax on the money raised, the promoter will not be successful in the long run,

[Bird Legs]

501(3)

In the instance you are talking about, the purchaser does not get a charitable contribution deduction. This 10% is merely part of the cost of merchandise.
The company doing the selling gets the deduction. That is, if it really does make the contribution.
Will the company mark up the price by the 10%? The church would not have to pay tax on this contribution because the company says it is a charitable gift. The church is not out trying to sell products.
Have a strong feeling that ths is just a come on by the company to generate more sales.

[erchess]

Well

I realized that there was no contribution by the buyer but possibly by the merchant.

Client is first going to make a few purchases himself and see if his church gets the donations. PM me in a few weeks if you want to know how that comes out.