Contemporaneous Written Acknowledgements Remain the Requirement

1696By: Deb Nelson

The IRS recently withdrew the September 2015 proposed rules for an optional form that would allow charities to directly report donors’ charitable contributions for substantiation purposes. The IRS received tens of thousands of comments on the proposed rules, mostly opposing the optional reporting.

The top reasons cited for resistance to the proposed rules were:

  • Collection of social security numbers;
  • Fears of this optional reporting becoming mandatory; and
  • Questioning the need for such donee reporting

The proposed rules were aiming to address taxpayers under exam who could not substantiate charitable contributions claimed on income tax filings, and who were requesting charities to file amended tax returns to disclose the contribution. The IRS has stated filing an amended Form 990 for this purpose is not allowed.

Due to the required collection of personal information, such as social security numbers, identify theft and additional cyber security issues were a concern for charities.  Many charities do not have the resources to put additional safety precautions into place in order to maintain this type of data.

Today, donors remain responsible for substantiating charitable contributions. A donor must have a written acknowledgment from a charity for any single contribution of $250 or more in order to claim the charitable contribution deduction on an income tax filing. In addition, the charity is required to provide language on the written disclosure if the donor received goods or services in exchange for a single payment in excess of $75. There are different rules if the donor contributed a vehicle, boat or airplane with a value of more than $500.

For more information on charitable contribution substantiation and disclosure requirements, see IRS Publication 1771.

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