Q: How can a Realtor structure a promotion to give a portion of commission to a charity?
I would like to set up a Marketing Service Agreement (MSA) to give part of my commission to a charitable organization in my area to buyers and sellers that engage the promotion. I want to advertise on the organizations website and newsletter with the offer. My company says this is an illegal referral fee under RESPA. I have seen many other realtors run similar promotions so I am assuming there is a way to structure a legal MSA promotion. I do not want to break any laws. Advice attorneys familiar with MSAs? I will need a CA real estate lawyer to write up some contracts for me as m brokerage won't.
A: Your commission is yours after you receive it, and not before. It has nothing to do with the company or any "referral" fee. Are you trying to divert or delay income to avoid this years alternative minimum tax?
You don't really need a real estate lawyer. You need a lawyer who knows about California's sales and use tax that regulates non-profit transactions. Start by checking the Attorney General's Registry of Charitable trusts to check out the organization you want to do this with. The charity can sell you advertisinig if it wants to. Or not. That's just an ordinary business transaction that is a tax deductible expense. It creates a problem for the charity about whether to charge or not charge sales or use tax.
If your wanting to accomplish something other than a deductible donation, the income is still yours when the deal closes, and taxable because tax applies when your right to receive the money happens. You can't delay to 2018.
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