Q&A: Correcting Contribution Receipts

Can our church issue an amended receipt to a donor?

In January of 2008 our church issued a receipt to a member who made a cash gift of $1,000 to our building fund in 2007. Our receipt did not include a statement that the church provided no goods or services in exchange for the contribution other than intangible religious benefits. We know that this statement is required for gifts of $250 or more, and our omission was inadvertent. The member is being audited by the IRS, and the $1,000 contribution is being challenged on the ground that the church failed to issue a receipt with the required language. Can we simply issue an amended receipt with the required information in order to ensure that our member can deduct his contribution?

The income tax regulations specify that a contribution of $250 or more must be substantiated by a receipt from the church or charity that contains all the required information and that is received on or before the earlier of the date the taxpayer filed the return for the year the contribution was made, or the due date, including extensions, for filing the return. In 2009, it is too late for your church to issue a receipt for a 2007 contribution that “cures” the defects in the original receipt.

In a recent letter ruling, the IRS observed that no tax deduction for a charitable contribution of $250 or more is allowed “unless the taxpayer substantiates the contribution by a contemporaneous written acknowledgment of the contribution by the donee organization. If an acknowledgment fails to contain the required information or the taxpayer fails to receive the acknowledgment within the required time … no deduction is allowed.”

The IRS stressed that “taxpayers may not cure the defect after the fact and receive a whole or partial deduction.” The effect of a failure to comply with the substantiation requirements “is total denial of deduction; partial deduction is foreclosed by statute.” IRS Letter Ruling 200848076.

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

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