Charitable Contributions

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IRS addresses substantiation of charitable contributions. The IRS issued Publication 1771 in 2002. This publication explains the substantiation requirements that apply to certain charitable contributions. The publication contains helpful information for both churches and donors. Consider the following:

Donors who make single contributions of $250 or more to charity must obtain a “written acknowledgment” from the charity that contains the following information: (1) name of the charity; (2) amount of the cash contribution; a description (but not the value) of non-cash contributions; (4) a statement that no goods or services were provided by the charity in return for the contribution, if that was the case; (5) a description and good faith estimate of the value of goods or services, if any, that the charity provided in return for the contribution; and (6) a statement that goods or services, if any, that the charity provided in return for the contribution consisted entirely of "intangible religious benefits," if that was the case.
There are no required forms for the acknowledgment. Publication 1771 states that "letters, postcards, or computer-generated forms with the above information are acceptable. An organization can provide either a paper copy of the acknowledgment to the donor, or an organization can provide the acknowledgment electronically, such as via an e-mail addressed to the donor." This is an important clarification that will assist donors in complying with the substantiation requirements.
Publication 1771 lists the following examples of written acknowledgments: (1) "Thank you for your cash contribution of $300 that (organization's name) received on December 12, 2001. No goods or services were provided in exchange for your contribution." (2) "Thank you for your cash contribution of $350 that (organization's name) received on May 6, 2001. In exchange for your contribution, we gave you a cookbook with an estimated fair market value of $60." (3) "Thank you for your contribution of a used oak baby crib and matching dresser that (organization's name) charity received on March 15, 2001. No goods or services were provided in exchange for your contribution."
Publication 1771 states, "A separate acknowledgment may be provided for each single contribution of $250 or more, or one acknowledgment, such as an annual summary, may be used to substantiate several single contributions of $250 or more."

Substantiation requirements relaxed. Generally, taxpayers must receive a "contemporaneous written acknowledgement" from a charitable organization before claiming an itemized deduction for contributions of $250 or more. The written acknowledgement gives donors a statement of the amount of cash or description of property contributed; whether the charity provided goods or services in consideration for the cash or property; and the value of those goods or services. A written acknowledgment must be "contemporaneous," which means that a donor must receive the acknowledgment by the earlier of (1) the date on which the donor actually files his or her individual federal income tax return for the year of the contribution, or (2) the due date (including extensions) of the return. However, because of the outpouring of contributions after the September 11, 2001 terrorist attacks, some charities were unable to supply donors with the required acknowledgements in a timely manner. In 2002 the IRS has announced that, as a result of the September 11, 2001, terrorist attacks, it had relaxed the substantiation requirements for certain charitable contribution deductions. Taxpayers who made charitable contributions of $250 or more after September 10, 2001, and before January 1, 2002, had until October 15, 2002, to obtain the required written acknowledgement from charities or get evidence of a good-faith effort to obtain it. Donors who did not receive documentation of their contributions could demonstrate good-faith effort by requesting a written acknowledgement from the charity either by letter or e-mail, a copy of which could be used as evidence of a good-faith effort. IRS News Release IR-2002-38.