Friday, March 29, 2013

Don’t Forget: IRS requires written acknowledgement for contributions of more than $250

In 2006, the co-founder of NDM Ferret Rescue Sanctuary, Inc. made forty-four (44) contributions to her organization totaling $10,022.  Seventeen (17) of those contributions, totaling $7,629, were each for $250 or more. While the IRS was satisfied that the co-founder actually made the contributions and that the organization was a valid charity, the IRS did not allow deductions for the seventeen (17) contributions over $249.99.

This is because the IRS requires a written acknowledgement from the donee for a charitable contribution of $250 or more. Moreover, the IRS imposes a timing requirement for the acknowledgement. The person wanting to claim the deduction must get the acknowledgement “on or before the earlier of” the dates he/she files the return for the year the contribution was made or the due date, including any extension, for filing the return.

The obvious moral of the story is that if you are a person who made a contribution of $250 or more to a qualified organization and you want to claim a deduction, get an acknowledgement before you file your return.

Interesting, however, is the ease with which the acknowledgement condition can be met. In the case involving NDM Ferret Rescue, one option for the co-founder would have been to write herself a letter. She would have had to provide the letter to the IRS, however, only if the deduction was questioned in an audit. Does this make much sense? What are the likely policy reasons for this requirement?

http://www.irs.gov/publications/p526/ar02.html#en_US_2012_publink1000229696

http://www.forbes.com/sites/peterjreilly/2013/03/23/charity-president-needed-to-write-herself-a-letter-to-claim-charitable-deduction/

dab

http://lawprofessors.typepad.com/nonprofit/2013/03/dont-forget-irs-requires-written-acknowledgement-for-contributions-of-more-than-250.html

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