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Hi. Are there any compliance issues if the Bank gives a $20 bill to the first 15 customers who use our new ATM deposit feature? It’s a promotion being held Friday. Thanks for your help!
I’m apologize we didn’t see your question sooner. I’d suggest looking at what you’re requiring the customer to do and determine if it meets the definition of lottery. If you were giving money away to the first 15 people who use your ATM, regardless of whether they are a customer or deposit funds, then I don’t think it would; however, with what you’ve stated it seems like it may qualify as a lottery since the individuals will have no way of knowing if they will get the prize. So essentially they will be depositing funds for a chance to win money. Again, review the definition of lottery and the prohibition to see if it applies. https://www.law.cornell.edu/uscode/text/12/25a
You’ll want to consider any tax reporting implications with your accounting/tax advisor. I think it will likely be reported under the 1099 MISC rules if you meet the qualifying amount, but since you are requiring a deposit to be made there is the possibility of the 1099 INT coming into play. Again, talk to your tax advisor to get their take on that.
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