TJT Client Advisory Services

Are Your Charitable Receipts Adequate?

The IRS has recently placed increased emphasis on proper documentation of charitable giving by individuals.  Several high-profile cases have produced rather surprising and worrisome results for the taxpayer.  Both cases have centered upon the receipt that the charity provided to the taxpayer.  In both instances, the charity failed to include the statement, “no goods or services were received as consideration for these donations.”  Because that phrase was omitted in the original receipt or letter of acknowledgment, the IRS disallowed the donation.  In the cases above, the charities produced another receipt after the return was filed including the appropriate statement, but the Tax Court disallowed it because it needed to be in the possession of the donor by the time the actual return was filed.

It is vital that you retain receipts for all donations in excess of $250.  A single receipt is fine for aggregating all donations to an organization under the $250 threshold.  All receipts should include the phrase regarding “no goods or services” provided.  In the case of a religious organization, a church should also include the phrase, “other than intangible religious benefits,” at the end of the statement.    Please review your charitable receipts carefully this year and make sure the appropriate language and documentation is included.  If not, ask your charity for a new receipt before you file your tax return.