Proposed Regulation to Allow for Exempt Organization to Use Information Returns for Donee Reporting
By Ashley Cooper, HoganTaylor Tax Manager
The Internal Revenue Service has issued Proposed Regulation 1.170A-13 that would implement the Code Section 170(f)(8)(D) exception to the “contemporaneous written acknowledgement” requirement for substantiating charitable contribution deduction of $250 or more. Code Section 170(f)(8)(D) provides for an exemption to the contemporaneous written acknowledgement if the organization files a return that includes the same information that is required on the acknowledgement.
However, the IRS has never provided for such reporting and has declined to issue regulations stating that the present system works effectively. The IRS now intends to develop a specific information return for donee reporting. This information return will be due on February 28th of the year following the year in which the contribution is made. The return will allow for reporting the name, address, taxpayer identification number, the amount of cash and description of any property other than cash contributed, whether any goods to services were provided by the donee organization in consideration for the contributions; and a description and good faith estimate of the value of goods or services provided by the donee organization.
Donees will not be required to adopt this new donee reporting, but may be adopted at the discretion of the donee organization. Organizations will be required to issue contemporaneous written acknowledgements if not using the new reporting method. Organizations that use donee reporting will be required to provide a copy of the information return to the donor no later than February 28th of the year following the year in which the contribution is made.
The IRS is requesting comments on the various features of the proposed regulations.