As 2013 draws to a close, public charities await year-end contributions, and Packers fans await the potential return of Aaron Rodgers, a charitable receipting “Double Check” is likewise in good order. Donors and donees must remember that a donation alone is not enough for a donor to claim a federal income tax deduction. A proper written acknowledgement from the donee to the donor substantiating the gift must be maintained. Earlier this year, a court in Texas denied a donor a charitable deduction because the written acknowledgment provided by the organization did not include the requisite language “no goods or services were provided as a result of the contribution.” See http://wagenmakerlaw.blogspot.com/2013/07/important-details-churchs-error-in.html Thus, donors and donees should take time to double check all charitable giving for the calendar year to ensure that proper written acknowledgments exist.
What constitutes a proper written acknowledgment? The statement should contain: (1) the organization’s legal name and address (and any assumed names if used in the solicitation); (2) the amount contributed; (3) the date of the contribution(s); (4) whether the organization provided the donor with any goods or services as a result of their contribution (other than token items); and (5) a description and good faith estimate of the value of any goods or services provided in (4) above. Organizations may, but are not required, to include their federal employee identification number. Failure to provide the foregoing information, except for the FEIN, may result in the donor’s failure to receive the tax deduction.
Below are two sample statements that may be included on an organization’s letterhead to donors.
(A) “Thank you for your [DATE/YEAR] tax-deductible gift of $ to [the organization], which is a tax-exempt [public charity or private foundation] under Section 501(c)(3) of the Internal Revenue Code. No goods or services were provided to you as a result of your contribution.”
(B) “Thank you for your [DATE/YEAR] contribution of $ to [the organization] which is a tax exempt [public charity or private foundation] under Section 501(c)(3) of the Internal Revenue Code. The following goods or services were provided to you as a result of your contribution, with a good faith estimated value of $ : [describe what was received by the organization]. The remaining amount of $ , for which no goods or services were provided to you as a result of your contribution, is a tax-deductible charitable contribution.”