Discussion:Substantiation for Charity
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Discussion Forum Index --> Tax Questions --> Substantiation for Charity
Death&Taxes (talk|edits) said: | 11 March 2007 |
| A client who has given in excess of $40,000 on an income of slightly over $125,000 has not been able to obtain a statement from one organization to which she gave $1,000 in one check. When she calls, the major domo of this community action-type 501(c)(3) tells her 'your check is proof' despite what she reads from the information I copied from IRS Publication 526. She says he is getting rather aggravated with her (biting the hand that feeds him, so to speak). Would you take the deduction for this charity on the 1040.
btw, there is no question of personal benefit. She is 70 and simply is generous. | |
| March 11, 2007 | |
| Yes, I would. The substantiation is required on audit, not prep. I'm wondering along similar lines on my own charitable giving for 2007 on the small cash stuff. I do keep QB on our personal checking, and it hit me the other day, the small gifts which can't be substantiated, aren't NOT charitable, just because IRS says so. They are charitable. They are not deductible, however. So I'm going to continue booking them to charitable and then figuring out at year end how much to remove from the tax. I'd hope that the charity hoo ha in your case would finally see the light and produce a letter, so I'd take it for her. | |
| 11 March 2007 | |
| Sec. 178(f)(8)(C) says that the documentation requirements for contributions of $250 or more are met if "the taxpayer obtains the acknowledgment on or before the earlier of (i) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or (ii) the due date (including extensions) for filing such return. -- Larry Hess, CPA, Albuquerque, NM - Talk to me | |
| 11 March 2007 | |
| You can write a strong letter to the charity on behalf of t/p requesting a receipt be sent, since it's more than $250.
This year every $ needs a receipt for the deductiion. | |
| 11 March 2007 | |
| JR, my friend, while I agree with your sympathies, the Code does not. No deduction is allowed unless t/p has receipt in hand prior to filing the return.
(8) Substantiation Requirement For Certain Contributions. -- (A) General Rule. -- No deduction shall be allowed under subsection (a) for any contribution of $250 or more unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization that meets the requirements of subparagraph (B). (C) Contemporaneous. -- For purposes of subparagraph (A), an acknowledgment shall be considered to be contemporaneous if the taxpayer obtains the acknowledgment on or before the earlier of -- (i) the date on which the taxpayer files a return for the taxable year in which the contribution was made, or (ii) the due date (including extensions) for filing such return. | |
| March 11, 2007 | |
| Yeah, I get it. Larry did a fine enough job. I'm sorry, ok? So she's got until Apr 17 then. Kind of like a SEP contribution that will come after I'm done, I'll still claim her deduction, counting on her getting that letter. Am I required to see the letter? I think not. | |
| 11 March 2007 | |
| I don't think a paid preparer is required to see documentation for any deduction unless they has have reason to believe the client isn't being honest.
This year I've been looking at the acknowledgments for $250-and-over contributions after seeing several last year from large churches that didn't include the required language that nothing was given to the contributor in return for the contribution. It's been quite an eye-opener for me and my clients. I'm having a hard time understanding why this omission is happening. It's not new law this year. -- Larry Hess, CPA, Albuquerque, NM - Talk to me | |
Bottom Line (talk|edits) said: | 11 March 2007 |
| People involved on the "business" end of charities don't always think in the same world as the rest of us. Once they've gotten their 501c3, many of them think that laws relating to charities don't apply | |
| 12 March 2007 | |
| BL, that's probably true. Yet, most charities have lawyers and/or CPAs on their boards who most likely are familiar with the documentation rules not to mention the contributors themselves who are berated by their tax preparers every year. The omissions just surprise me, whatever the reasons. -- Larry Hess, CPA, Albuquerque, NM - Talk to me | |
| March 12, 2007 | |
| But just because a 501(c)(3) has a professional on its board does not mean that he or she gets into the nitty gritty of how a letter is written, particularly when the organization has been around for a while and the professional has been a member for a while. In my experience, this is an area in which nonprofits really need help -- another type of compliance issue. | |
Death&Taxes (talk|edits) said: | 12 March 2007 |
| This type of letter should be almost boilerplate on a 501(c)(3)'s computer. Fill in the name, date and amount and someone should sign it. What gets me is that Congress puts the onus on the giver, not the recipient, so that if I write a letter to the charity, my client has to now pay me for that letter and perhaps answering a phone call from this arrogant idiot. Far better to tell her to write IRS' non-profit group telling them of her conversations with this person. | |
Bottom Line (talk|edits) said: | 12 March 2007 |
| She may want to write the members of the Board saying that she would like to continue contributing but has not been able to get proper documentation and has been treated rudely. Suggesting that the money stream will stop should rattle a few cages and get the paperwork she (and others) need. | |
| 24 March 2008 | |
| I have a similar problem. The public school here accepts donations for after school programs. It gives a receipt for the donation but refuses to put the required wording on the receipt. Do I have an ethical problem if I put the donation on the tax return if the criteria to deduct is not complete? Ie: am I subject to a preparer penalty? | |
| 24 March 2008 | |
| Reminding the charity that they could lose their 501(c)3 if they ignore required acknowledgments of donations might get some action... | |
Death&Taxes (talk|edits) said: | 24 March 2008 |
| John, are we talking cash (check or credit card) or donations in kind? Might make a big difference in how the school views it. | |
| 24 March 2008 | |
| I lost big time in an audit for a client because the required wording was not on all the reciepts. The auditor didnt deny that the client donated, but without the required documentation as specified by the letter of the code, he wasn't gonna budge. So another audit came up, and the wording wasn't on the church reciept, so the client inquired about it, and the church person said 'oh that used to be on there, but I changed it to make it seem friendlier' (!) and what she changed it to was just something like 'thank you for giving'. Sheesh. little donations, I tell the clients about the record keeping requirements. Big donations, I wanna see the reciept if only to watch out for this kinda stuff. | |
| March 24, 2008 | |
| John, is it the school that is accepting donations? Or is it a parent organization?
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| 26 March 2008 | |
| The School is a govenmental entity. It is exempt under 501(a) not 501(c)(3). Under 170(a) the contributions are deductible. They qualifiy as a recipient organization. The IRS guidelines for auditing government entities, such as municipalities or schools, (in addition to making sure the payroll reporting is correct) has the auditor look to see if the entity is giving propert receipts for donations to them. So far, they have not had an audit. I am a town councilman and I helped our town through their audit which primarily concentrated on the payroll tax side of it. | |
| March 26, 2008 | |
| So your client is an individual who received an inadequate donation receipt from the school. There must be consequences for the school if they don't provide the proper disclosures, correct? I'm sorry, I don't know the answer to your question, but it seems the school should be willing to add the proper disclosures if they want to keep receiving donations. | |
Death&Taxes (talk|edits) said: | 26 March 2008 |
| I asked the question whether these were cash donations because I have seen so many charities issue beautiful conforming letters valuing peoples' services. "Thank you for the talk you gave to our group; it was surely worth $350 and you received no personal benefit." Same thing applies to self-made works of art given for auctions and the like. | |
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