As we move into the height of this year’s charitable giving season, we respectfully remind our clients of the IRS’ very strict view, and recently reiterated emphasis, on providing donors with proper paperwork substantiating contributions. When a charity fails to issue certain documentation or disclosures, the IRS may deny the donor a tax deduction for his or her generous contribution.
The IRS imposes these requirements strictly — the charity must include the proper language verbatim, and substantial compliance is insufficient. Merely acting in a manner consistent with the intent of the IRS requirements can still result in denial of a tax deduction for the donor. The IRS reiterated the importance of strict compliance, and the consequences of a charity’s failure to comply, earlier this year in Durden v. Commissioner, TC Memo 2012-140. In Durden, the IRS disallowed a charitable deduction of $25,000 because the taxpayer was unable to produce a contemporaneous written acknowledgment substantiating the contributions.
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