Tax Court states that timely proper receipts for charitable contributions from a charity are required for a donation to be deductible
The United States Tax Court In Durden v. Commissioner, T.C. Memo. 2012-140 (May
17, 2012), held that an income tax deduction was properly disallowed by
the Internal Revenue Service for a charitable contribution, because the
charity did not provide a statement that no goods or services were
provided in consideration for the contributions. The Tax Court had found
that the first acknowledgement received by the taxpayer lacked a
statement regarding whether any goods or services were provided in
consideration for the contribution, and the second acknowledgment, which
included that statement, was not contemporaneous. I.R.C. Sec.
170(f)(8)(A) provides:
“No deduction shall be allowed under subsection (a) for any
contribution of $250 or more unless the taxpayer substantiates the
contribution by a contemporaneous written acknowledgment of the
contribution by the donee organization that meets the requirements of
subparagraph (B).” For donations of money, the donee's written
acknowledgment must state the amount contributed, indicate whether the
donee organization provided any goods or services in consideration for
the contribution, and provide a description and good faith estimate of
the value of any goods or services provided by the donee organization.
I.R.C. 170(f)(8)(B) and Treas. Reg. 1.170A-13(f)(2). A written
acknowledgment is contemporaneous if it is obtained by the taxpayer on
or before the earlier of: (1) the date the taxpayer files the original
return for the taxable year of the contribution or (2) the due date
(including extensions) for filing the original return for the year.
I.R.C. 170(f)(8)(C) and Treas. Reg. 1.170A-13(f)(3). While the
taxpayers argued they substantially complied, the Tax Court would have
none of it holding: Petitioners have failed strictly or substantially
to comply with the clear substantiation requirements of section 170(f)(8), and their deduction for the charitable contributions in issue for 2007 must be disallowed.
Moral
of the story: when making contributions to charities, obtain a
statement from the charity indicating whether or not there was value
received from the charity and maintain that receipt with your records in
case you are audited. This should be obtained before the tax return
claiming the deduction is filed.
