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Strict Substantiation Requirements for Charitable Contributions

In case you thought this issue was no longer being audited by the IRS …

Simpson, T.C. Summary Opinion 2019-9, May 2, 2019

Under strict substantiation requirements for cash charitable contributions of less than $250, a taxpayer must have one of the following:

  • A bank record such as a canceled check, bank statement, or credit card statement,

  • A receipt with date, contribution amount, and organization name, or

  • Payroll records and a pledge card, if made by payroll deduction.

For cash charitable contributions of $250 or more, a taxpayer must obtain a written acknowledgement from the charitable organization that shows the following:

  • Date and amount of contribution,

  • Whether any goods or services other than intangible religious benefits were provided by the organization (including a good faith estimate of the value), and

  • A statement that the only benefit the taxpayer received was an intangible religious benefit (if applicable).

The taxpayers in this case deducted $2,125 for cash charitable contributions they made to their church for 2013. The taxpayers credibly testified during their tax court trial that they contributed tithes and offerings to their church by check and in cash during the year.They said they received a contribution letter each year from their church, but they did not keep a copy of the letter for 2013. The court understood their testimony to mean that they made regular contributions each of which may have been less than $250 to their church throughout the year.

A letter from their church, dated November 22, 2016, addressed to the taxpayers listed the total amounts of contributions it received from the taxpayers for 2011, 2012, and 2013. The letter explained that the church does not archive contribution letters for more than two years. For 2013 the letter lists contributions made by the taxpayers totaling $2,125 but does not indicate on what dates the contributions were made. The letter also states:

“These donations were not in exchange for goods or services and are tax deductible.”

The court stated the letter does not include the date(s) of the contributions as required by IRC section 170(f)(17). The court concluded that the taxpayers are not entitled to deduct $2,125 for the cash charitable contributions they made to their church in 2013 because they failed to meet the recordkeeping requirements of the statute.

Copyright 2019 National Society of Tax Preparers. All rights reserved.

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