What would happen if the IRS audited your program book?

It is common practice to give away/trade ad space in turn for needed goods and services for your organization. Also many organizations give away/trade ads to corporate sponsors but this can create some tax consequences. We have heard of situations where sizable taxes on unrelated business income had to be paid for trading advertising in an organizations program.

In addition to potential tax penalties, trade ads can run up your printing bill big time! Staff members that are not intimately involved with the make up of a program and are quick to trade, assume it is just another page and the cost is minimal. Remember your program is printed in signatures (4 page increments)….signatures come in numbers evenly divisible by 4 (4, 8 12, 16, 24, etc.) and there are good signatures and bad signatures in page makeup.

Giving away one extra ad could throw your layout into a very costly signature configuration, as well as raise an eyebrow with the IRS. It is far better to have a sponsor pay a discounted rate for an ad…….have your cake and eat it too. Remember the perceived value of a give away is….no value at all. In the end this will ultimately hurt the sale of ads in your program.