Have you noticed the following language at the bottom of a receipt you receive for your donations?
No goods, services, or other tangible benefits were received in exchange for these contributions.
The language is magical. In a recent tax court case, Durden v Commissioner, T.C. memo 2012-40, a case out of Texas, a $25,000 charitable deduction was disallowed on the taxpayer's 1040. A computer generated notice in 2009 asked for verification for the 2007 itemized charitable deduction. A letter from the church which was the bulk of the donations was sent to the IRS along with the cancelled checks for verification. The IRS said it was not adequate documentation. A second letter was sent from the church that added the statement if any goods or services were provided in consideration for the contribution. The second letter was rejected by the IRS. The IRS PREVAILED because the letter was not obtained prior to the filing of the return including extensions.
Bell & Co will step up its efforts in 2013 to review your charitable contributions if significant for the proper paper work.
If you have any questions, please give us a call at 501.753.9700.