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IRS withdraws proposal to use donee reporting to substantiate contributions

The IRS has withdrawn proposed regulations issued late last year that would have given charitable organizations the opportunity to opt out of the current “contemporaneous written acknowledgement” requirement for substantiating charitable contributions and, instead, adopt donee reporting as a means of satisfying the charitable contribution substantiation requirements for deductions of $250 or more.

The proposed regulations specified rules with respect to the time and manner for donee reporting to satisfy the exception which was intended to create an alternative to the contemporaneous written acknowledgement standard. In response to the proposed regulations, the IRS received a substantial number of public comments, with many questioning the need for the donee reporting option and expressing significant concerns about organizations collecting and storing donee taxpayer identification numbers, particularly in light of identity theft risks.

Concerns associated with properly protecting the sensitive information required from donees for donee reporting prompted the IRS to withdraw the proposed donee reporting regulations. As a result, the current contemporaneous written acknowledgement requirement will continue to be the only method for verifying contributions that are made to charitable organizations.

If you are a charitable organization, now would be a good time to review your adopted procedures for complying with the contemporaneous written acknowledgement requirement. A donor who makes a contribution of $250 or more should receive a contemporaneous written acknowledgement that contains the required information such as the amount of cash contributed, a description of any property contributed, and any consideration received. The written acknowledgement should be provided to the donor by the earlier of the date that the donor files their return for the year the contribution was made or the due date of the return, including extensions.

Contact your WK advisor at (573) 442-6171 or (573) 635-6196 if you have any questions regarding substantiation requirements.


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Posted By Kathy Graessle, CPA on 2-8-2016 | Topics: Client Alerts, Essentials, Newsletters,