As part of its continuing effort to uncomplicate the income tax rules that apply to people even indirectly affected by the September 11 terrorist attacks, the Internal Revenue Service has announced a new rule that eases the requirement for obtaining substantiating documentation for charitable contributions.
Taxpayers who make charitable contributions after September 11, 2001 and before January 1, 2002 have been given an extension of time until October 15, 2002 to obtain documentation supporting their donation. Normally, taxpayers who make charitable contributions of $250 or more are required to obtain documentation before filing the tax return on which the donation is deducted.
In order for a taxpayer to claim a deduction for a donation of $250 or more, the taxpayer must obtain a written letter or receipt from the charitable organization indicating the amount of cash or describing the item or items received. The documentation must include a statement indicating whether the charity provided goods or services in return for the donation.
The donation documentation does not get attached to tax returns - it is kept for the taxpayer's records in the event the tax return is examined by the IRS. If documentation is not received from the charitable organization, the taxpayer is required to show a good faith effort to obtain documentation. A copy of a letter or e-mail message requesting the documentation is sufficient evidence of such a good faith effort.
Taxpayers who made donations during the September 11 to December 31, 2001 time period may go ahead and file their tax returns on time this spring even if they are awaiting documentation.