Your Finance Questions, October 2008

Q: A member of our church is being audited by the IRS. The IRS auditor

Q: A member of our church is being audited by the IRS. The IRS auditor is telling her that the church’s contribution receipts are not acceptable because they do not list the church’s employer identification number. Would you be aware of any such requirement?

A: There is no such requirement. Note the following considerations:

1. Many smaller churches that employ a pastor and no other staff do not have an employer identification number. Does this mean that every contribution made by members of the church is non-deductible? Of course not.

2. IRS Publication 526 (“Charitable Contributions”) states:

You cannot deduct a cash contribution, regardless of the amount, unless you keep one of the following. (1) A bank record that shows the name of the qualified organization, the date of the contribution, and the amount of the contribution. . . . (2) A receipt (or a letter or other written communication) from the qualified organization showing the name of the organization, the date of the contribution, and the amount of the contribution.

If you made more than one contribution of $250 or more, you must have either a separate acknowledgment for each or one acknowledgment that lists each contribution and the date of each contribution and shows your total contributions. . . . The acknowledgment must meet these tests. (1) It must be written. (2) It must include: (a) the amount of cash you contributed, (b) whether the qualified organization gave you any goods or services as a result of your contribution (other than certain token items and membership benefits), (c) a description and good faith estimate of the value of any goods or services described in (b) (other than intangible religious benefits), and (d) a statement that the only benefit you received was an intangible religious benefit, if that was the case. The acknowledgment does not need to describe or estimate the value of an intangible religious benefit.

3. The tax code and regulations contain almost identical language. Neither Publication 526, nor the tax code or regulations, requires churches to list their employer identification number on contribution receipts.

4. In no reported case has any court ever interpreted the tax code and regulations to require that a charity’s employer identification number be listed on contribution receipts.

5. The only reference to employer identification numbers in the tax code or regulations pertains to “qualified appraisals” of donated property valued by the donor at more than $5,000. Donors must attach a qualified appraisal summary (Form 8283) to their tax return to substantiate such a gift, and this form requires the employer identification number of the appraiser to be listed.

6. The employer identification number is used by the IRS to track employers’ compliance with the payroll tax reporting requirements. It has nothing to do with charitable contributions.

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