Under Sec. 170(f)(8), to claim a charitable contribution deduction for any contribution of $250 or more, a donor must obtain from the donee charity a contemporaneous written acknowledgment containing specific information about the contribution. To be considered contemporaneous, the acknowledgment must be received no later than the time the taxpayer files his or her return for the year the contribution was made.
An exception under Sec. 170(f)(8)(D) allows donors to avoid the contemporaneous written acknowledgment requirement if the donee organization files a return in a form provided by IRS regulations that includes the information required under Sec. 170(f)(8)(B). For many years, the IRS has declined to issue regulations permitting information reporting by charitable organizations to substantiate donations.
Now, however, the IRS will develop a specific-use information return for donee reporting, which the charitable organization will file with the IRS and provide a copy of to the donor. However, charitable organizations are not required to adopt donee reporting, and if a charity does not do so, a donor making a contribution of $250 or more will be required to obtain a contemporaneous written acknowledgment to take a deduction for the contribution.
Under the proposed regulations, a charity that opts to use donee reporting must report the information required under Sec. 170(f)(8)(B), as well as the donor's name, address, and taxpayer identification number (TIN) on the new information return. Although the TIN is needed so the IRS can match information from the charity with information from donors' returns, the IRS recognizes that this requirement poses an identity theft risk, especially because the charity must maintain this information for some time. It requests comments on ways to minimize this risk.
The donee reporting information return must be filed with the IRS and the donor by Feb. 28 of the year following the donation, to give donors timely information to file their tax returns. This due date is consistent with many other information return due dates.
The proposed rules will apply to contributions made on or after the date the regulations are published as final in the Federal Register.
—By Sally P. Schreiber, J.D., a JofA senior editor.