Dave Moja | Aug 9, 2017 | TaxTips
Issue
The IRS has become increasingly persnickety about donation receipts – and the verbiage therein.
Situation
Marathon Bible College (MBC) is a private college exempt under Internal Revenue Code section 501(c)(3) and section 170(b)(1)(A)(ii).
A married couple, Charles and Kathy, committed to give $200 a month to MBC. For the 2016 tax year, their contributions totaled $2,400 and no check was more than $200. MBC is not – technically – required to give the couple any type of receipt if each contribution is less than $250. However, it is a best practice for an institution to provide an annual statement to all donors. Charles and Kathy should keep copies of cancelled checks as their “backup” for any tax deductions.
The IRS and the Tax Court – in several recent rulings – have stipulated that the organization must also include a statement to the effect that the organization does not provide goods or services in whole or partial consideration for any contributions made to the organization (unless goods or services were provided – then refer to the “quid pro quo” receipting rules).
Further, the IRS requires that a donor must have a bank record or written communication from a charity for any monetary contribution before the donor can claim a charitable contribution on his/her federal income tax return.