Meeting Substantiation Requirements

Lack of donation proof can cause tax problems.

Church Law and Tax 1996-05-01

Charitable Contributions

Key point. Contributions to a church or other charity are not deductible unless they can be substantiated.

The Tax Court ruled that a volunteer music minister could not deduct most of his church contributions since he lacked sufficient proof that he made most of the contributions he claimed. A computer consultant (the taxpayer) served as a volunteer and unpaid minister of music at his church. In this position the taxpayer organized choirs, played music, and performed other music—related functions. A tenet of the taxpayer’s church is tithing—contributing 10 percent of one’s income to the church. To set an example for the congregation, church leaders often contribute a greater amount to the church. For 1989 the taxpayer reported income from his consulting business of $80,000, and charitable contributions to his church in the amount of $18,151. The IRS audited the taxpayer’s 1989 tax return, and reduced his charitable contribution deduction to $2,657 since the taxpayer had records (check carbons) to substantiate only this amount. The taxpayer appealed to the Tax Court. He claimed that he made cash and check contributions to his church and that he believed in tithing. The pastor of the church testified that the taxpayer made contributions to the church but could not identify specific dates or amounts. However, he did testify that the church maintained records pertaining to contributions, that he did not bring those records to the trial, and that the taxpayer did not request him to do so.

Following the trial, the taxpayer attempted to remedy this lack of evidence by submitting a brief to the Court accompanied by several documents purporting to verify his charitable contributions to the church. The Court refused to consider this evidence, noting that “evidence must be submitted at trial. Documents attached to briefs and statements made therein do not constitute evidence and will not be considered by the Court.” The Court concluded:

EXT [The taxpayer’s] testimony, as well as the testimony of [the pastor] as to [his] general giving patterns is not sufficient to substantiate [the] charitable contributions. In addition, [the taxpayer’s] argument on brief that the 1990 check carbons, which were submitted as evidence, are representative of his giving patterns is not sufficient to substantiate … charitable contributions for 1989. [The taxpayer] presented no receipts, canceled checks, or written records to substantiate the claimed deduction. We note that written records of contributions were maintained by [the church]; however, [the taxpayer] failed to present those documents. Accordingly, [he] is not entitled to a charitable contribution deduction in excess of the amount previously allowed by [the IRS].

The Court stressed that charitable contributions must be substantiated, and the burden of proof is on the taxpayer. It observed: “For charitable contributions of cash, a taxpayer shall maintain for each contribution a canceled check or receipt from the donee indicating the name of the donee, the date of the contribution, and the amount of the contribution, or in the absence of a check or receipt from the donee, reliable written records showing the name of the donee, the date of the contribution, and the amount of the contribution.” Additional requirements apply to individual contributions of $250 or more. Brown v. Commissioner, T.C. Memo. Dec. 51,145(M) (1996).

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