Charitable Contributions: Make Sure You Have a Complete and Correct Receipt

IRS regulations require a contemporaneous written acknowledgement in a specified form from a qualified charity to support your donation of $250 or more.  There is no alternative to this, and no accommodation is being given to taxpayers who don’t strictly follow the rules.

A proper and complete charitable acknowledgment receipt must be obtained at the time of donation, or no later than the earlier of the date the taxpayers return is due or filed. The receipt  must be dated, describe the of property or amount of money donated, contain information that identifies the recipient, and must contain a statement of whether the recipient organization provided any goods or services in exchange for the donation. If any goods or services were provided the receipt must include a description and an estimate of the value of the provided items.  If nothing was provided, which is the typical situation, the receipt should contain a statement that “no goods or services were provided in exchange for this donation.”

In the latest case of a donation deduction denied by the IRS (Durden v Commissioner TC Memo 2012-140) the taxpayer had made donations to their church and had obtained a receipt letter that  lacked the statement about whether any goods or services were provided.  IRS denied the deduction.  The taxpayer subsequently obtained a new receipt that contained the required statement.  The deduction was still denied and the Tax Court upheld the denial.  Their ruling was that under Code Section 170 the corrected receipt was not contemporaneous (received in the time allowed) and therefore not admissible.  The deduction was disallowed even though no one suggested that the taxpayer hadn’t actually made the donation.  The ruling was based solely on the strict compliance requirement for the supporting documentation. Without the complete and contemporaneously obtained receipt, the court and the IRS were unable to allow the deduction.

Most charities are familiar with these rules, but we still see a number of improper receipts every year.  Take the time to review your acknowledgement letters/receipts when you receive them and promptly notify the charity if they don’t contain all the correct information. If the IRS comes asking for your receipts it will be too late to get them fixed.

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