Tax Court Denies Charitable Contribution

Donor did not meet new substantiation requirements, court ruled.

Richard R. Hammar, Attorney, CPA
Bio

New rules took effect in 1994 for the substantiation of individual charitable contributions of $250 or more. However, the rules for substantiating cash contributions of less than $250 remain the same. Donors making individual cash contributions of less than $250 must be able to substantiate such contributions with one of the following:
  1. canceled checks,
  2. a receipt or letter from the church showing the church’s name and the amounts and dates of the contributions, or
  3. any other reliable written record showing the name of the church and the amounts and dates of the contributions.
  4. Background
  5. In the case Witherspoon v. Commissioner, T.C. Memo. 1994-593, a taxpayer claimed cash contributions of $3,500 to her church. She was audited and the IRS denied any deduction for these contributions. The IRS claimed that the woman had insufficient evidence to substantiate the contributions. The taxpayer claimed that these contributions were all made in cash, and so she had no canceled checks to substantiate them.
  6. She also claimed that she kept no records or receipts to prove her contributions. The only evidence she had was a letter from her church stating that the taxpayer made contributions of $3,500 to the church during the year in question “through tithes, offerings, and love donations.” No church representative testified during the woman’s trial.
  7. The court’s ruling
  8. The court agreed with the IRS that the woman had failed to substantiate the $3,500 in charitable contributions to her church. It dismissed the church’s letter by noting that “the letter from the church is very general and provides no information as to how and when [her] contributions were made. The evidence presented does not satisfy the court that [she] made the contributions to the church in the amount claimed.” The court was satisfied that the woman made some contributions to the church, and allowed her a deduction in the amount of $450.
  9. What this means to churches?
  10. As noted above, donors making individual cash contributions of less than $250 must be able to substantiate such contributions with one of the following:
  12. canceled checks
  13. a receipt or letter from the church showing the church’s name and the amounts and dates of the contributions, or
  14. any other reliable written record showing the name of the church and the amounts and dates of the contributions
  16. The taxpayer did not keep canceled checks, and she had no other records to substantiate her contributions—other than the general letter from the church stating that she had contributed $3,500 during the year in question. Such a letter is not enough to substantiate contributions of less than $250, because it “provides no information as to how and when [the] contributions were made.” The woman would have been entitled to deduct her church contributions if the church’s letter had reported the “amounts and dates” of her contributions.

  17. Tip. Generic letters that merely report the total amount of contributions given by a donor during the year will not be enough to substantiate the donor’s individual cash contributions of less than $250. The letter, or receipt, must list church’s name and the dates and amounts of each contribution. Additional rules apply to the substantiation of individual contributions of $250 or more.

  18. Witherspoon v. Commissioner, T.C. Memo. 1994-593
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.

Related Resources

Visit Store

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay
caret-downclosefacebook-squarehamburgerinstagram-squarelinkedin-squarepauseplaytwitter-square