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IRS Issues Final Regulations Governing Substantiation of Charitable Contributions

 

New Rules Will Impact Non-Profit Organizations that Solicit and Accept Charitable Contributions

On July 30, 2018, the IRS published final regulations that will impact any Internal Revenue Code 501(c)(3) charitable organization that solicits or receives charitable donations.  The final regulations address the substantiation and reporting rules for charitable contributions under Internal Revenue Code Section 170.  The final regulations set forth (1) substantiation requirements for contributions of more than $500; (2) the new definitions of “qualified appraisal” and “qualified appraiser”; (3) substantiation requirements for contributions of clothing and household items; and (4) recordkeeping requirements for all cash contributions, regardless of amount.

The final regulations largely adopt existing guidance and the proposed regulations that were issued on August 7, 2008, except that the final regulations (1) eliminate the standard for the reasonable cause exception that was set forth in proposed regulation Section 1.170A-16(f)(6); and (2) clarify that the rules under Section 1.170A-15 are in addition to the requirements in Section 170(f)(8).  The elimination of the reasonable cause standard reflects the U.S. Tax Court’s decision in Crimi v. Commissioner, T.C. Memo. 2013-51, which held that any reasonable cause conclusion must be based upon the taxpayer’s facts and circumstances.

For more information about the final regulations, see https://www.federalregister.gov/documents/2018/07/30/2018-15734/substantiation-and-reporting-requirements-for-cash-and-noncash-charitable-contribution-deductions.

MBK provides tax advice and guidance to non-profit, tax-exempt and charitable organizations, including organizations seeking guidance on complying with federal, state and local tax rules and regulations.

Myers, Brier and Kelly LLP.

Lisa Bothwell joined Myers, Brier & Kelly, LLP in 2015.  Her practice is concentrated in estate planning, estate and trust administration, and individual and corporate business and tax matters. Lisa works extensively with individuals and families to develop and implement sophisticated estate plans customized for their unique needs and wishes.  Her practice includes planning for […]

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