United States: Cautionary Tale: $22,000 In Charitable Donations Disallowed By The IRS

Last Updated: July 1 2013
Article by Barbara J. McGuan

In a recent court case, the tax court disallowed approximately $22,000 in charitable contributions made by the Durden family to its church. The family provided bank records and two separate written acknowledgment letters from the church to substantiate the charitable giving, but none of the documentation satisfied IRS requirements.

This case serves as a stark reminder that taxpayers need to know when and what kind of documentation is required by the IRS. Likewise, not-for-profit organizations who accept charitable donations have an obligation to provide their donors with the proper documentation in a timely manner. This ensures that donors receive the full benefit of their charitable giving.

Part of why the tax court disallowed the $22,000 in donations is that the acknowledgements that the family received from the church fell short. Specifically, the church did not include a statement of whether goods or services were provided in exchange for the payment. The family was unable to prove that the payments made were not in exchange for meals or other goods and services. The family also did not obtain the proper written acknowledgement from the church until after it had filed its tax return.

Taxpayers: Keep your donation documentation

The IRS requires proper documentation of any cash or non-cash gift to a qualified charitable organization in order for the deduction to be available to taxpayers. Deductions of cash contributions, regardless of the amount, must be substantiated by a written statement from the organization.

For gifts less than $250, the IRS also allows records that confirm a taxpayer's payment to a charitable organization such as a cancelled check, bank record, or payroll deduction record. For example, when you make a charitable donation via text message, such as when the Red Cross runs a text message donation plea for the storm victims, your telephone bill will satisfy the documentation requirement in the case of an IRS exam if the amount donated is less than $250.

Pay attention to due dates

As a taxpayer, you must obtain written acknowledgement for your charitable contributions on or before the earlier of: (1) the date you file your tax return for the year of the contribution; or (2) the due date of your tax return (including extensions). You must retain this statement in order to substantiate a tax deduction.

What about contributed land, cars, boats, and other high-value items?

If a taxpayer donates a motor vehicle, boat, or airplane to a charity with a value of more than $500, the donor must obtain a Form 1098-C from the charity. Copy B of the Form 1098-C needs to be attached to the donor's tax return in order to take the tax deduction.

Most non-cash gifts valued at more than $5,000 must be substantiated with extra documentation. These gifts have to be appraised by a qualified appraiser, and a taxpayer must attach the qualified appraiser's statement to the proper tax return along with Form 8283. The charity must also sign the Form 8283. For example, an appraisal is required to determine the donation amount of a tract of land to a charity. This appraisal must be attached to the tax return in order to substantiate the donation.

What can charities do to assist their donors?

In addition to a signed Form 8283 discussed above, for gifts of cash or property worth $250 or more, taxpayers must obtain a contemporaneous written acknowledgement from the charitable organization. The acknowledgement must include:

  1. The amount of the cash gift, and/or
  2. A description of any property donated, and
  3. A statement of whether the organization provided any goods or services to the donor in exchange for the gift.

Perhaps one of the most important pieces of information that the written acknowledgement contains is the statement of whether the organization provided any goods or services in exchange for the gift. It is very common to receive a good or service in exchange for a donation. For example, a donation to the local public broadcasting network often includes a gift of thanks. If the value of this gift is more than a nominal amount, the value must be subtracted from the total amount given to arrive at the tax deductible donation.

Qualified charitable organizations can help their donors meet these requirements by providing them with the proper the documentation in a timely manner. This written acknowledgement must include all of the requirements listed above. By helping your donors receive the full tax benefit of their charitable giving, you can help the donors who want to help your organization.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Brown Smith Wallace
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Brown Smith Wallace
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions