Passing a hat and collecting money, like selling CDs, is a merchant activity. The performers are as subject to PA tax law as other merchants, should have a tax ID number, and be doing sales through the Merchant Area. The Cultural Affairs areas are not equipped to regulate gate donations or sales. Performers are encouraged to sell their wares through a merchant in the merchant area, and even to announce where that is at their performances.
There is another (perhaps more important) motivation, besides the potential tax issues, behind this rule as well. Performance space at Pennsic should go first and foremost to the many talented performers of the SCA. As it is we turn down more performers than we accept. Over the last several years we have had a number of professional non-SCAdian groups contact us wanting to come to Pennsic. Booking agents who see this as a lucrative gig for their clients, performers from the Renfair circuits who are not willing to abide by Pennsic rules or standard SCA etiquette, performers used to being given star treatment where they are hired. My goal is to make it clear that the performances, like all Pennsic activities are volunteer based. If performers are only coming to Pennsic to make money, they should rethink their plans. If they are coming to Pennsic for the sake of Pennsic, and are willing to give of their time and talents like so many others (teachers, marshals, volunteer staff) do, we welcome them.
There is nothing stopping anyone from choosing to donate to a performer they appreciate.
I encourage people who wish to make donations to favorite performers do so on their own if they so desire. Arrangements made privately between performers and audience outside of the performance areas, in general public areas, are entirely between the two parties involved; however be aware that "sales" in public areas may fall under the Pennsic Merchant rules.
People are welcome to talk to me at Pennsic if they wish to discuss this,
Chai