IRS Disallows Charitable Contributions

by David
(Georgia)

Hi, a member of our church is being audited by the IRS. The member gave the IRS the annual contribution statement that I provided to him.

The statement included the church name & address, the name of the member, each date during the year when contributions were made, the amount of each contribution (broken down by fund - tithe, missions, building fund, etc), check#, cash, or last 4 of debit card, a statement that no goods or services were provided in exchange, and my name and signature image.

The IRS told him that they were disallowing all his charitable contributions as this contribution statement was not sufficient.

Have you seen this before?

I would guess almost every church member uses the annual contribution statement provided to them from the church as evidence.

If the IRS disallowed his due to insufficient evidence, then the rest of the church world that filed taxes with the annual contribution statement as their evidence could be at risk. Thanks!

Comments for IRS Disallows Charitable Contributions

Average Rating starstarstarstarstar

Click here to add your own comments

Nov 19, 2019
Rating
starstarstarstarstar
Did your Church file an IRS Form 1023?
by: Vickey

I thought of something last night. Has your church filed for official IRS tax exemption by filing a 1023?

Churches are automatically considered tax exempt 501(c)3 organizations. See my article on this: https://www.freechurchaccounting.com/tax-exempt-status.html

HOWEVER, as I stated in that article:
"Many churches DO seek recognition of tax-exemption from the IRS by filing a Form 1023. One reason is that without the IRS's official recognition of tax exemption ... the burden of proof of tax deductible contributions is on your donors if ever audited.

So your donor may have to prove they gave to a "church". See how the IRS defines what is a church in this article: https://www.freechurchaccounting.com/churchdefinition.html

Nov 18, 2019
Rating
starstarstarstarstar
He Needs to Contact a Lawyer!
by: Vickey

According to the IRS site:

The written acknowledgment required to substantiate a charitable contribution of $250 or more must contain the following information:

-Name of the organization;

-Amount of cash contribution;

-Description (but not value) of non-cash contribution;

-Statement that no goods or services were provided by the organization, if that is the case;

-Description and good faith estimate of the value of goods or services, if any, that organization provided in return for the contribution; and

-Statement that goods or services, if any, that the organization provided in return for the contribution consisted entirely of intangible religious benefits, if that was the case.

https://www.irs.gov/charities-non-profits/charitable-organizations/charitable-contributions-written-acknowledgments

If your statement had all of that information on it, your church or your donor should contact a knowledgable attorney.

Please keep us updated on this situation. As you stated this could affect all of us!

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Contributions Q&A.



Need training on how to use QBO or Aplos effectively for a church or better yet ...need an expert in either of those accounting software to do your monthly bookkeeping and/or payroll? See more on our accounting services!