The IRS has issued proposed regulations that would implement the statutory exception to the “contemporaneous written acknowledgement” requirement for substantiating charitable contributions of $250 or more. The proposed regulations will require the use of a new reporting form by donee organizations—still in development—rather than using the Form 990 to serve this purpose.
We’ve posted on the different requirement for substantiating charitable deductions before. A requirement that can bite donors is the “contemporaneous written acknowledgement” one, which requires gifts of $250 to be substantiated by a contemporaneous written receipt that contains the following information:
- The amount of the cash donation, and a description of any property other than cash contributed;
- Whether any goods and services were provided by the done organization in consideration for the contribution; and
- A description and good faith estimate of the value of any goods and services provided by the done organization or a statement that such goods and services consist solely of intangible religious benefits.
To be considered contemporaneous, the receipt must be obtained by the taxpayer on or before the earlier of the date the taxpayer files the original return for the tax year of the contribution; or the due date (including extensions) for filing the original return for the year. A written acknowledgment obtained after a taxpayer files the original return for the year of the contribution is not contemporaneous within the meaning of the statute.
If a donor gets a receipt that does not contain all the requisite information—or gets a complete receipt but does not receive it contemporaneously—the donor’s contribution will not be deductible if challenged by the IRS. However, the statute does provide an exception to this requirement, if the donee organization files a return, on such form and in accordance with such regulations as IRS prescribes, that includes the information described.
Some donors have tried to argue that they were not required to have contemporaneous written acknowledgement if the donee organization filed a timely Form 990 that disclosed the donor’s gift. However, the IRS has taken the position previously that because it hadn’t specified the form to be used for donee reporting, a Form 990 would not be sufficient.
Before the proposed regulations are finalized, the IRS intends to develop a specific-use information return that donee organizations would use for reporting. Donee organizations will not be required to report to the IRS, but if they do so they must use the specified form; file it with the IRS by February 28 of the year following the year in which the contribution was made; and provide a copy to the donor by that same date.
The proposed regulations require the form to contain the same information as would be needed for contemporaneous written substantiation (described above), plus the name and address of the donee; the name and address of the donor; and the donor’s taxpayer identification number. The IRS believes having an individual-focused form will better protect donor privacy than using the Form 990.