ISSUE

As colleges and seminaries send donor receipts at the end of the year, does an email receipt meet IRS regulations?

 

SITUATION

Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(i).  They are required to file Form 990 annually.

Historically, SCC has received a healthy percentage of their annual charitable contributions at the end of the calendar year.  They are contemplating methods of streamlining and gaining efficiencies with their donor receipting process.  Their CFO calls us to ask whether “email donor receipts” are acceptable with the IRS.

We tell them that new regulations – promulgated in 2018, updating the rules based upon the 2017 “Tax Cuts and Jobs Act” – state clearly that “written communication” for purposes of substantiating charitable contributions, “includes email.”

 

RULES

From Treasury Regulation 1.170A-15:

(a) In general.

(1) Bank record or written communication required. No deduction is allowed under sections 170(a) and 170(f)(17) for a charitable contribution in the form of a cash, check, or other monetary gift, as described in paragraph (b)(1) of this section, unless the donor substantiates the deduction with a bank record, as described in paragraph (b)(2) of this section, or a written communication, as described in paragraph (b)(3) of this section, from the donee showing the name of the donee, the date of the contribution, and the amount of the contribution.

(b) Terms.

(1) Monetary gift includes a transfer of a gift card redeemable for cash, and a payment made by credit card, electronic fund transfer (as described in section 5061(e)(2)), an online payment service, or payroll deduction.

(2) Bank record includes a statement from a financial institution, an electronic fund transfer receipt, a canceled check, a scanned image of both sides of a canceled check obtained from a bank website, or a credit card statement.

(3) Written communication includes email. [underline added]

 

BOTTOM LINE

  • As we know, a donor cannot claim a tax deduction for a cash contribution unless the donor substantiates the gift with a bank record or obtains a contemporaneous, written acknowledgment of the contribution from the recipient organization.
  • In many (if not most) instances, donors desire a written receipt from your institution.
  • Remember to include the “IRS prescribed” verbiage on written donor receipts.
  • The “deadline for receipt of substantiation” means that it is received by the donor by 1) the date the donor files the original return for the taxable year in which the contribution was made; or 2) the due date, including any extension, for filing the donor’s original return for that year.

 

Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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