CHARITABLE CONTRIBUTIONS ACKNOWLEDGEMENTS

The acknowledgment letter received for making a charitable contribution is an important document. Without a properly worded letter received in a timely fashion you could be denied a deduction on your personal tax return. The Tax Court upheld a disallowance inDurden, T.C. Memo 2012-410. The ruling pertained to a series of contributions made by checks, each totaling over $250, made throughout the year. Two key issues were the timing of the acknowledgement letter and what was not included in the letter.

The first issue was that the letter was not “contemporaneous.” It was received by the taxpayer several years after the contributions were made. To meet requirements the letter should have been received no later than when the taxpayer files their return, including extension. The second issue was that the letter did not include wording indicating that “no goods or services were received in consideration for the donation”. An acknowledgement should include that language or, if goods or services were received, the value of them. With both of these missing, the Tax Court denied the deduction the taxpayers had taken on their return.

So, if you make a contribution of $250 or more or are the charitable organization that receives the contribution, you will want to ensure acknowledgements are timely and include the proper wording to maintain the contribution’s deductibility on tax returns.