IRS Softens Requirement for Contribution Documentation

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.

You may like these other stories...

There it stands, your client's 100-year-old, rickety, vermin-infested barn or former hotel or whatever the darn thing once was. And she's considering what to do with it. There are two words that can help her decide...
It's not a reality—yet—but accounting software is poised to eliminate accountants. We are at a tipping point for many similar professions: online education replacing professors, legal software replacing...
Did you know that the tax code allows you to claim tax deductions for household damage caused by thefts, vandalism, fires, floods, hurricanes, and others kinds of casualties? But the law imposes several restrictions.Relief...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.