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Sweepstakes Prizes are Considered Income by the IRS
In the eyes of the IRS, a sweepstakes prize is not a “gift,” it is income. Under the Internal Revenue Code, specifically Section 61, “all income from whatever source derived” is taxable unless a specific exception exists. Because sweepstakes winnings are considered “other income” (similar to a bonus or a second job), they are subject to the same federal and state income tax rates as your regular salary. Here is
How to Avoid Deceptive Advertising
In the context of sweepstakes, deceptive advertising occurs when a promotion uses misleading statements, omissions, or visual trickery to give a participant a false impression of their odds, the prize value, or the requirements to win. The Federal Trade Commission (FTC) and state Attorneys General monitor these closely. If a “reasonable consumer” would be misled by the advertisement, it is considered deceptive. Common Forms of Deceptive Advertising 1. The “False
What is Equal Dignity in Sweepstakes?
In the world of sweepstakes, Equal Dignity (also known as the “Equal Dignity Rule”) is a legal principle ensuring that people who enter for free have the same chance of winning as those who pay. Because “paying to enter” a game of chance constitutes a lottery—which is illegal for private businesses to run—companies must provide an Alternative Method of Entry (AMOE). The Equal Dignity Rule dictates that this free entry
What is a Potential Prize Winner?
In lawful and promotional contexts, a potential prize winner is someone whose entry has been selected in a contest or sweepstakes, but whose eligibility hasn’t been officially confirmed yet. Unlike how many onlookers have speculated on message boards that it seems to be a scammy term, rest assured, it is not (unless being used by a scammer, of course!). Think of it as a “pre-verification” stage. If you get a
Why You Should Run a Memorial Day Sweepstakes
Memorial Day is, primarily, a solemn occasion to honor the men and women who have made the ultimate sacrifice in service to our country. It is a day of reflection and gratitude. Simultaneously, Memorial Day weekend serves as the unofficial kickoff to summer. It’s a time when families take advantage of the long weekend for quick getaways, backyard barbecues, and quality time together. For brands, this creates a unique dual-natured
Father’s Day Sweepstakes & Contest Ideas That Drive Engagement
Once the joy and excitement of Mother’s Day has come and gone, everyone is reminded that Father’s Day is not too far behind! And while dads might not always make a big fuss, we all know how meaningful it is to be recognized and appreciated – especially when it comes from the people and brands they love. Father’s Day promotions don’t need to be complicated. The best ones are simple,