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.