Be Sure to Comply with the New Substantiation Rules

What church treasurers need to know.

Richard R. Hammar, Attorney, CPA
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Church Finance Today

Be Sure to Comply with the New Substantiation Rules

What church treasurers need to know.

Richard Hammar

The Pension Protection Act of 2006 changes the way donors substantiate cash contributions to a church or charity. The Act amended the tax code to require all cash contributions, regardless of amount, to be substantiated by either a bank record (such as a cancelled check) or a written communication from the charity showing the name of the charity, the date of the contribution, and the amount of the contribution. The recordkeeping requirements may not be satisfied by maintaining “other written records.”

In the past, donors could substantiate cash contributions of less than $250 with “other reliable written records showing the name of the charity, the date of the contribution, and the amount of the contribution” if no cancelled check or receipt was available. This is no longer allowed. This change is effective for contributions made after 2006. Church treasurers must be familiar with these new rules to ensure that members will be able to deduct their cash contributions.

This article first appeared in Church Treasurer Alert, January 2007.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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