About this ebook
contributions to a church were denied tax deductibility by the Internal Revenue
Service. The couple appealed the IRS decision. The Court upheld the IRS's
denial of significant charitable contribution deductions.
There was no disputing that the couple made the
contributions, or that the contributions were made to qualified 501(c)(3)
organizations, or even that the value of the contributions was at least as much
as the couple had reported. However, the couple failed to comply in some way
with substantiation requirements of the Tax Code and Regulations, so their
contribution deductions were denied.
Durden v. Commissioner, T.C. Memo. 2012-140 (May 17,
2012), involved a Texas couple who claimed a deduction of $25,171 for cash
contributions to their church in 2007. The church sent a letter of
acknowledgement in January of 2008, but that receipt lacked a statement of
whether any goods or services were provided to the Durdens in exchange for
their contributions. In 2009, the IRS sent a notice to the couple disallowing
their charitable contribution deduction for 2007.
The couple obtained a second letter from the church which
did include the proper statements. Nevertheless, the IRS denied the deduction
because the Durdens failed to get a proper receipt from their church. In the
IRS's view, the first acknowledgement was lacking a statement of whether goods
or services were provided by the church, and the second acknowledgement was not
a "contemporaneous" receipt, because it was not received by the
Durdens by the due date for filing their original return for the year. Because
the Durdens did not have proper receipts, the judge agreed with the IRS that
the Durdens failed to comply with the substantiation requirements of IRC
170(f)(8).
This case should represent a reminder that churches and
charities need to supply donors with proper receipts. This case makes it clear
that, ultimately, it is the taxpayer's responsibility to comply with the
requirements for disclosure and substantiation in order to take charitable
contribution deductions for gifts they have made. However, churches and
charitable organizations should be familiar with the reporting and substantiation
requirements so that they can help their donors comply.
Our goal is to empower the clergy with the awareness and
strategies they need to avoid tax pitfalls, so they are able to remain focused
on fulfilling the Great Commission.
keywords: Comprehensive, IRS, Tax Return, Financial, Tax,
Guide, Clergy, Ministers, Preparation, Strategies, Returns, Maximize
About the author
Dr. Ricky Carr, president of RJCFS, is a Registered Tax Return Preparer (RTRP). Registered tax return preparers have the right to prepare and sign tax returns and claims for refund. RTRPs also may represent clients before revenue agents, customer service representatives, or similar officers and employees of the IRS (including the Taxpayer Advocate Service) during an examination.
In addition, Dr. Carr has been admitted to the Preparer Tax Identification Network and the National Alliance of Tax Preparers. This means he is entitled to all rights and privileges of membership as a licensed tax return preparer, and qualified for listing in the National Directory of Registered Tax Return Preparers and Professionals. He has the experience and training needed to help you, and other members of the clergy, maximize your tax-saving potential. With RJCFS on your side, you no longer have to feel alone in trying to keep up with the ever-changing laws that affect your ministry.
