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As the end of the calendar year approaches, many institutions have questions about donor receipting.  A great place to start in your quest for answers may be IRS Publication 1771, “Charitable Contributions” (Substantiation and Disclosure Requirements).

 

SITUATION

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

The Accounting Team at SCC asked an interesting question at the end our video meeting this week.

“With all this talk about year-end giving, donor receipts, Forms 8282 and 8382, quid pro quo, and nondeductible contributions (such as QCD’s), is there a place where we can go to quickly find a summary of the IRS’ rules on donor receipting from our institution’s standpoint?”

“That’s a great question.  In addition to past issues of “Tax Tips”, probably the best place to start is IRS Publication 1771, “Charitable Contributions.”  That document can easily be found on the IRS website in PDF format.  It is only 9 pages long and covers items like:

  • Recordkeeping Rules
  • Written Acknowledgments
  • Unreimbursed Expenses
  • Written Disclosures

Publication 1771 can be found at:

https://www.irs.gov/pub/irs-pdf/p1771.pdf

 

RULES

From IRS Publication 1771, “Charitable Contributions”:

IRS Publication 1771, Charitable Contributions–Substantiation and Disclosure Requirements, explains the federal tax law for organizations, such as charities and churches, that receive tax-deductible charitable contributions and for taxpayers who make contributions.

The IRS imposes record keeping and substantiation rules on donors of charitable contributions and disclosure rules on charities that receive certain quid pro quo contributions.

Requirement

A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or letter) showing the name of the charity, the date of the contribution and the amount of the contribution.

 

BOTTOM LINE

  • Donor receipting can be convoluted and complicated.
  • December is a great month to review your procedures on receipting donors.
  • Contribution receipts should contain the institution’s name, amount of cash contribution, description (but no the value) of non-cash contributions, and a good faith estimate of any goods and/or services provided.
  • Let us know if you’d be interested in a webcast on IRS Publication 1771 – and beyond.

 

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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