Wait…what? There are taxes to be paid on winning a raffle prize?!
Yes! That’s absolutely the case. Prize Winners owe taxes on Prizes won in ALL raffles, not just the The Eighth Annual Climate XChange EV Raffle (The Raffle). And it’s Big Bucks when the Prizes are expensive.
Here’s how much money is involved. And, if you’re interested, keep reading on to learn the details.
Important note: Nothing on this page is intended to constitute legal or tax advice. All participants should consult your own legal and/or tax advisor.
Our Grand Prize Includes Tax Payments On Your Behalf
For the Eighth Annual Climate XChange EV Raffle, we offer a choice of any Tesla or Rivian model, or an electric vehicle from any manufacturer that can be delivered by June 30, 2024, as the Grand Prize. The Second through Fifth Prizes and our Early Bird Prize are all cash! Because the tax burden on the Grand Prize Winner would be large (see below), we also pay the U.S. withholding tax on your Prize on your behalf. Turns out that there’s also a Massachusetts withholding tax that you would owe… so we pay that one, too! And for reasons you can learn in the details below, Climate XChange even pays more than you would. Equally as bad, if you had to pay the withholding taxes yourself on the Grand Prize, you would even have to send them in before Climate XChange could pay an electric vehicle maker to deliver your Prize! Ouch!!
Grand Prize — Your choice of any fully-customized Tesla or Rivian model, or an electric vehicle from any manufacturer that can be delivered by June 30, 2024 (with a value for the vehicle of up to a maximum of $112,835).
We pay the sales tax and registration fee up to $7,352
We pay the IRS up to $42,317 on your behalf
We pay the Massachusetts Department of Revenue up to $8,816 on your behalf
In the aggregate, we pay total tax payments of up to $58,485 so you don’t have to pay them directly
We’re also including $5,000 for Charging Support, which the Winner can use for electrical work to install a home charger, or to pay for using local charging stations, or fast chargers on road trips
Which means that CXC pays out a total of up to $176,320 for the Grand Prize
Early Bird Prize — the Prize payout to Prize winner is $10,000
Winner responsible for taxes on prizes
Second Prize — the Prize payout to Prize winner is $10,000
Winner responsible for taxes on prizes
Third Prize — the Prize payout to Prize winner is $5,000
Winner responsible for taxes on prizes
Fourth Prize — the Prize payout to Prize winner is $3,000
Winner responsible for taxes on prizes
Fifth Prize — the Prize payout to Prize winner is $2,000
Winner responsible for taxes on prizes
You may not know this: as a Prize Winner, you may immediately owe withholding taxes to the IRS. Below, we explain why that’s a problem and also why we make the Grand Prize better by dealing with this problem!
When a Winner wins a raffle prize, United States law and IRS regulations treat the raffle prize as income to the Winner, so those laws and regulations require that the Winner pay taxes on the Fair Market Value of that Prize. When the Prize is small, $5,000 or less, those taxes are solely the responsibility of the Winner. In the event that the value of the Prize is $5,001 or more, the organization sponsoring the raffle must withhold the required amount of taxes on the Prize. The sponsoring organization then remits these taxes to the IRS.
In many (most?) cases, raffles require the Winner to come up with the necessary cash in advance, either by sending the appropriate amount to the sponsoring organization or by allowing the sponsoring organization to deduct money from the Prize (if, say, the Prize has a cash component). In the case of Climate XChange’s Grand Prize, Tesla and Rivian models are valued up to $112,835 (plus MA state sales tax and registration fee), so the Winner would be required to send 25% of that value to Climate XChange to be forwarded to the IRS — over $28,000! And you’d have to send us that money before you received your Prize.
It turns out that the Commonwealth of Massachusetts also requires a withholding tax payment. That’s because Climate XChange is based in Massachusetts and the Commonwealth’s taxation laws follow the federal taxation laws. So Massachusetts treats a Prize awarded by a Massachusetts-based nonprofit (that’s us, Climate XChange) as Massachusetts-derived income to the Winner. And that’s taxable. In the case of the Grand Prize, the Winner would have to send us 5% of that value — over $6,000. In advance, of course.
Because we at Climate XChange believe that most people don’t have this kind of money lying around to send to the IRS and the Massachusetts Department of Revenue (DOR) whenever they feel like it, we decided that the Grand Prize should include, as part of the Prize itself, the required U.S. and Massachusetts withholding tax payments for the Prize. The IRS and DOR understand and allow for this possibility. However, because the tax payment we make on your behalf is also something of value to you, it turns out that we have to pay taxes on the taxes that we are paying for you! We have to pay the IRS 33.33% of the Prize’s Fair Market Value, rather than the 25% you would have to pay directly, for the privilege of paying your U.S. prize tax for you, because when we pay those taxes on your behalf, that counts as income to you. Then, Massachusetts wants another 5%. But wait…it gets worse…the money we send to Massachusetts counts as income for you from the IRS perspective. So we have to pay tax to the IRS on the taxes we paid on your behalf to Massachusetts. Then, from the Massachusetts perspective, we’ve just given you more income by sending a larger tax payment to the IRS, so now we have to pay tax on that to Massachusetts! This craziness goes on for a while until the taxable amounts become small enough that we reach a dollar or less. (Incidentally, while the regulations allow us to subtract the price of the raffle ticket from the amount we send the IRS and the DOR, we no longer bother, as the amount we would save is tiny compared to the amounts we have to pay.)
Any and all other taxes, fees, surcharges, excises, and so on, whether from the United States, the Winner’s state, the Winner’s locality, or anywhere else on the planet, are the responsibility of the Prize Winner.
For further details, including any restrictions or caveats, see our Legal Details Page.
The Grand Prize vehicle may be eligible for additional benefits, depending on the winner’s location and income, and the vehicle’s price and U.S. manufacturing content. The Inflation Reduction Act of 2022 provides for new federal EV incentives from January 1, 2023, which have specific income, vehicle price and domestic content limitations.
In some locations, the purchaser of an electric vehicle is eligible for an incentive from their state, local government, or utility. Tesla, Inc., maintains its own list of state and local incentives, which may be found on their website.
There are only a few things you should know when purchasing a ticket for the Eighth Annual Climate XChange EV Raffle . If you want more details, you can find them on our Ticket Purchasing Details Page.
The price of a single ticket is $250.
All ticket sales are final.
Receiving Your Receipt & Ticket
Each purchaser will receive an electronic purchase receipt delivered to their email address from Climate XChange, with a link to sign and download their ticket PDF file. Each purchaser who agrees to receive text notifications will also receive a text with a link to sign and download their ticket PDF file.
We will print all raffle ticket stubs and enter your ticket stub into the Drawing. More details about that on our Ticket Purchasing Details Page.
In order to download your ticket from the link delivered by email or text, you must sign it by entering your initials, indicating your acknowledgement of receipt of the purchase confirmation. The signature is important to us, because it lets us know that you downloaded the ticket. However, even if you don’t sign and download the ticket and even if we never hear back from you, your ticket stub will still be entered into the Drawing and you will still have a chance to win one of the Raffle’s Prizes!
The ticket and attached stub already include the signature of an authorized representative of Climate XChange.
You must be 18 years or older to purchase a raffle ticket or to be the beneficiary of a ticket.
The raffle is not available for purchase in Alabama, Arkansas, California, Hawaii, and Utah.
The ticket purchaser — and beneficiary, if the beneficiary is not the same as the purchaser — must also be citizens of the United States or legal residents.
Climate XChange’s staff members and their families, as well as board members and any paid partners in Climate XChange’s work are not eligible to purchase a ticket.
The ticket’s stub will be entered into the Drawing and will be eligible for all five Prizes. We will draw the Grand through Fifth Prizes, in that order, and announce them in reverse order from Fifth to Grand Prize. If the stub is drawn for a Prize, the ticket/stub will not be re-entered into the Drawing and therefore will not be eligible for additional Prizes.
Early Bird Drawing
If a ticket is purchased in the first month of the Raffle (by 11:59pm ET on November 18, 2023), it will be entered in an Early Bird Drawing on November 20, 2023, where the Winner will receive $10,000. All tickets, including those entered in as well as the winning ticket of the Early Bird Drawing, will be entered in the final Drawing for our Grand Prize and 2nd–5th Place Prizes.
How To Make a Purchase
Use the Buy Tickets button on this web page or any other part of the website.
Checking the Status of Your Order
You may check the status of your order by emailing email@example.com or calling us at (617) 624-0919.
We Don’t Use the U.S. Mail
CXC does not have the option to mail raffle tickets via U.S. Mail and will not do so. It is against federal law to send a raffle ticket through the U.S. Mail (see 18 U.S.C. Section 1302), so please don’t.
Fantastic! You’ve won the Grand Prize or one of the other five Prizes! Here’s what you must do.
Claiming a Prize
You must claim the Prize. We’ll help. On the day of the drawing, we’ll use the contact information you supplied when you purchased your raffle ticket to attempt to contact you. The Winner shall be notified by telephone and/or email and, if necessary, Certified U.S. Mail. We’ll keep trying your telephone number and/or email address for up to 90 days. After 90 days, if we haven’t been able to reach you, we will consider that you have forfeited your Prize.
Once you are in contact with Climate XChange, you will need to confirm your identity. Your name must match the name under which we sold you the raffle ticket. You will need a government-supplied photo identification, such as a Driver’s License or a Passport. In some cases, we may choose to accept alternate forms of identification and/or a high-resolution scan of the identification.
Once we have verified your identity and confirmed that you are a Winner, you must supply us with the following information:
– Your Full Name
– Your Taxpayer Identification Number (this is usually your Social Security Number)
– A signed affidavit attesting to winning and accepting the Prize — we will supply you with this document — to be returned to us as a physical document, with notarization
We will issue a Form W-2G to you at the appropriate time. We will also report your Prize win to the IRS, as we are mandated to do by law and regulation. For any Prize where we have promised to pay withholding tax payments on your behalf, we will timely file the necessary paperwork and payment. See IRS Notice 1340.
We also expect Winners of any of the Prizes to allow us to use their name, likeness, and state as part of our celebration and promotion of this raffle, online and offline, and as part of any future raffles we may conduct. By entering the raffle you are providing your consent for such use of your name and likeness.
Alternate All-Cash Prize
Ordering Your Electric Vehicle
New Tesla and Rivian vehicles are “build-to-order” or selected from online inventory. For the Grand Prize, you can choose the Model X Plaid or Long Range SUV, the Model S Plaid or Long Range Luxury Sedan, the Model Y Midsize SUV, the Model 3 Midsize Sedan, the Rivian R1T pickup, or the Rivian R1S SUV. We stand ready to help you with this process, not to mention, pay for it. If you wish, we will work with you to create an account for you on Tesla’s or Rivian’s website. We can also give you advice about configuring the car. Of course, you ultimately decide exactly what you want in your new Tesla or Rivian: major options, colors, interiors, and so on. Once you have finalized your configuration, we will pre-pay Tesla or Rivian the amounts as described elsewhere.
Your vehicle will be built by Tesla, Inc. or Rivian Automotive, Inc. as they would any other purchaser’s vehicle, and it will be delivered in their standard timeframes. We recommend you consult a Tesla sales representative or the Tesla or Rivian websites to determine vehicle delivery times.
At its sole discretion, Tesla, Inc. or Rivian Automotive, Inc. may deliver the vehicle to your home. Otherwise, it will be available at the Store or Service Center nearest your home or place of work.
If you would like an electric vehicle from another manufacturer, we will work with you to identify and order your vehicle through your local dealer.
Inventory & Certified Pre-Owned (CPO) Vehicles
Tesla has a number of so-called “inventory” cars: some are demo cars that were built for Tesla showrooms or build-to-order cars whose orders were canceled. These cars may have additional mileage and use but are still sold by Tesla as new cars. They are available for immediate purchase, but the customer has no option to reconfigure them in any way. Rivian may also have inventory cars available.
Tesla also has a Certified Pre-Owned (CPO) vehicle program that makes used cars available for immediate purchase. These cars are sold “as is.” Rivian may develop a CPO program.
Climate XChange believes that the Grand Prize Winner is likely to be happiest with a brand-new, custom-configured vehicle. However, you may choose an inventory car or a CPO vehicle, if you prefer.
Federal Tax Credit & State Incentives
From January 1, 2023, some Tesla and Rivian vehicles and some buyers may qualify for the new federal EV tax credit. In addition, there may be applicable state, local and utility incentives. You may see Tesla’s list of state and local incentives here. Please consult your tax professional.
Cash In: The Grand Prize Winner has the option to add their own money to the Prize, so that they can take delivery of a more expensively-configured vehicle than the Prize itself would otherwise permit (this can happen in the event of Tesla or Rivian introducing new options, model variants or pricing after the Raffle starts, the winner facing state/local taxes and fees that are higher than in Massachusetts, or the winner selecting a vehicle from another manufacturer exceeding the maximum Prize value). Climate XChange shall not be responsible for paying any vehicle manufacturer or dealer an amount over $112,835 for the vehicle itself, plus up to $7,352 in state/local sales taxes and registration fees.
Wednesday, October 18, 2023: Ticket Sales Begin
Raffle tickets will be sold up to the maximum of 5,000 valid tickets. Ticket sales will cease as soon as the maximum is reached or the sales period expires.
For details, see our Ticket Purchasing Details Page.
Raffle ticket sales are final.
Saturday, November 18, 2023 before midnight Eastern Time: Early Bird Drawing Deadline
Ticket sales will no longer be entered into our Early Bird Drawing for $10,000 after November 18th.
Monday, November 20, 2023 at 3 p.m. ET : Early Bird Drawing
All tickets sold through November 18th will be entered into our Early Bird Drawing. Our Winner will be selected randomly by our auditors. The drawing will not be livestreamed, but all ticket buyers will be notified by email about the results of the drawing. All tickets, including the Early Bird Prize Winner, will be entered into our February Drawing.
Tuesday, February 27 2024 at 2 p.m. ET: Ticket Sales Conclude
Ticket sales end February 27, 2024, at 2 p.m. Eastern Time, unless sales end earlier due to reaching the maximum number of valid tickets to be sold. See our Ticket Purchasing Details Page for further details. Raffle ticket sales are final.
Thursday, February 29, 2024 at 3 p.m. ET: Drawing
The Climate XChange Annual EV Raffle Drawing will be conducted at 3 p.m. ET (the live-stream will begin at 2 p.m. showing all tickets being loaded into the raffle drum, but the actual drawing of the tickets will take place at 3 p.m.) at Climate XChange’s office, located at:
One Beacon Street, Fl. 15
Boston, MA 02108
The Drawing will be live-streamed over the Internet; instructions for locating and joining the stream will be published on the CXC and Raffle websites and emailed to all ticket buyers a few days before the Drawing is held.
Winners will be notified!!!
The Climate XChange Raffle team operates in partnership with providers for areas such as accounting/audit advice, legal advice and website construction. See our Partners and Services Details Page for more information.
We want you to know that this Raffle has expenses associated with it, which means that not all of the money taken in by Climate XChange for a Raffle ticket goes directly to Climate XChange for its charitable and educational purposes. Some of these expenses are not subject to our choice while others involve conscious trade-offs on our part. For more information, see our Expense Details Page.