Background. A blank check is a check that is complete in all respects except for the designation of a payee. The person issuing the check specifies the date and an amount, and signs the check, but does not identify a payee. Occasionally a church will receive a blank check in the offering or in the mail. This can occur for a number of reasons. Some elderly church members may simply forget to complete the check. Others may assume that the church will insert (or “stamp”) its name as payee, so why bother.

Can church members claim a charitable contribution deduction for a blank check? No, said the United States Tax Court in a recent case.

The court’s ruling. A husband and wife claimed a charitable contribution of $16,000 to their church in 1991, and an additional $18,000 in 1992. The IRS audited the couple’s tax returns, and questioned the contributions to their church. The couple attempted to substantiate their deductions with canceled checks and carbon copies of checks from their two personal checking accounts on which they left the payee lines blank. The Tax Court ruled that “because these canceled blank checks fail to list [the church] as the donee, these checks to not establish” that the couple made tax-deductible charitable contributions to the church.

This case involved tax years prior to the overhaul of the charitable contribution substantiation requirements that occurred in 1994. Prior to those changes, taxpayers could rely on canceled checks to substantiate charitable contributions. Today, canceled checks may still be used to substantiate charitable contributions, but only for contributions of less than $250. As a result, this case is of continuing relevance, especially in light of the fact that the vast majority of checks issued by donors to churches are for less than $250.

Relevance to church treasurers. This case suggests the following actions: (1) From time to time churches should inform members that while checks can still be used to substantiate contributions of $250 or less, this rule may not apply to blank checks. Churches can share this information in church bulletins or newsletters, or in a note enclosed with contribution receipts. (2) Church treasurers should consider returning blank checks to donors, and asking them to reissue their checks with the name of a payee (generally, the church). Dorris v. Commissioner, T.C. Memo. 1998-324.

This article originally appeared in Church Treasurer Alert, November 1998.