"EDITED ONLINER DIALOGS"
TOPIC: Contemporaneous Donation Receipts ORIGINATED April 2006
TOPICAL OVERVIEW: It is said that all tax-exempt organizations (especially Churches) need to issue a Contemporaneous (issued now or you can not wait until the end of the calendar year, etc.) Donation Receipt for each Donor benefit-free tax deductible contribution that is made to a tax-exempt organization that is $250.00 or greater.
FILE: 2042-07 UPTD: March 09, 2012
Original Email to Jim@bcidot.org
A Financial Vice President of a well known Christian Camp recently called to our attention that, in order for the Donor to make a tax deductible donation, the IRS requires a tax-exempt entity to render now an individual receipt for each donation over $250.00 --- it also is to include certain other legal assurances about the Donor not receiving any goods or services in return for their payment.
At this Church we render to each Donor a list of said donations made throughout the reporting period (in our case, the Donors receive this calendar list no later than January 15th, etc.). I know of no church that issues individual donation receipts for each donation of $250.00 or more.
Within context, how do you interpret the content of a recent magazine article, per the link below, by a well known Ministry savvy CPA on this topic? http://www.thechurchreport.com/content/view/1237/32/
I did not quite understand the terms "contemporaneous written acknowledgement" that appears in the recent magazine article so I looked it up in the dictionary and it means "occurring simultaneously or at the same time." It sounds like all tax exempt organizations, including Churches, that do not issue a receipt right now jeopardizes the donor getting a charitable deduction for tax purposes. It doesn't seem to leave much of an option for the tax exempt Ministry and the donor unless you ask them to keep all donations under $250 which, of course, does not make sense.
When I was at XYZ Bible Church some years ago we issued receipts for all donations over $250 to each contributor at the church. It was a pain but we did it.
At my Church we had planned to add the �no goods were received in exchange" disclosure on this year�s annual donation list or annual giving statements. But individual receipts for each donation over $250 would amount to an enormous number of weekly receipts. A rough guess would be around 100 receipts on a $35,000 deposit.
After reading the article, it seems that timely and appropriate disclosure are the real issues and not when (or how) it is done.
It does sound like quite a bit more work at a Church, but if that is what the IRS requires for the donation to be tax deductible by the donor them we should provide them with an immediate receipt. Is there an attorney or tax accountant that can give us their view as to such matters?
Yes, I am going to take this subject to the Yahoo Forum at http://groups.yahoo.com/group/churchadmin/ A prominent well known Ministry savvy attorney is a frequent contributor to this excellent Forum and he no doubt will express his views. I am sure other Church Administrators also are dealing with this matter and will have some thoughts to share.
I realize that in a non-church setting, the rendering of a receipt after each gift is a further opportunity for the Ministry to communicate with non-members who they seldom/if ever get together with, etc. But a "Contemporaneous Donation Receipt" in a Church setting seems unnecessary 'overkill.'
Another part of all of this is has to do with cancelled checks. It seems that cancelled checks are valid verification that money went to a Church, etc. Of course, these days so few of the financial institutions send them with the monthly bank statement, .plus, of course, there still is the need for the Church to verify that the check was NOT used to pay for goods or services.From Jim Thank you for each of you sharing above. I trust each of you will go to the above Church Business Admin Forum and learn from what is shared. The obvious intent of the IRS is for the tax exempt entity to verify that a taxpayer really and timely does makes a "qualified" tax deductible donation of $250.00 or more to them so the taxpayer can use it as a tax deduction within their applicable tax return. I agree with the attorney mentioned by Onliner #5 above as he shared within the recent Church Business Admin Forum. Namely that this objective is reached when a tax deductible donation is acknowledged by the tax-exempt entity in either of the following two ways:
>> The individual tax payer donations are made known to them as a part of a list provided by a tax-exempt entity of said donations as sent to them by the tax exempt entity on or before the 15th of January of each calendar year, or --
>> As the donation is made and duly recorded by the tax-exempt entity and made known to the tax payer when received by the tax exempt entity during the calendar year.
Of course, a part of this process is to assure the IRS that the donor did NOT buy something from the tax exempt entity or receive any sort of current or residual benefit from such payment (donation) made to them. This can be done as part of the annual list mentioned above.
REMINDER: The IRS's real objective is to have assurance that a qualified donation is made by a tax payer to a tax exempt entity and that it is available to be used as a tax deduction in the applicable tax year.
As most of you know, at www.bcidot.org we dialog by email with Onliners regarding Ministry Finance (MinFin) matters. Above are what we call "Edited Onliner Dialogs", or edited versions of actual dialogs with some of you; but we have honored your privacy and not used your name or that of your Ministry. Our purpose is to make topical MinFin information available to any interested Ministry Finance Team so we all can learn from these perspectives. Thanx - Jim Bramer, Retired Auditor-CPA - Proverbs 9:10
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