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Keeping Adequate Records for Charitable Donations

November 28, 2011

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When a taxpayer makes a charitable donation, he or she must maintain adequate records.  Without such records, the taxpayer is not entitled to a charitable deduction under Section 170 of the Internal Revenue Code.  This situation occurred in Joyce A. Linzy v. Commissioner because the taxpayer, who ironically owned and operated an income tax return preparation business, was unable to provide proper records.

The taxpayer made charitable contributions to Church 1 and Church 2 in 2007.  The contributions to Church 1 totaled $7,500 and were acknowledged by both a letter dated January 1, 2010 and copies of checks, all for amounts greater than $250.  The contributions to Church 2 were evidenced by a tithing statement dated January 1, 2010 which acknowledged that the taxpayer donated a total of $2,255 and included several copies of checks, some of which were for amounts less than $250.

For cash donations less than $250,

IRS Exempt Organization Newsletter 2011-18

November 22, 2011

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On November 18, the IRS released its Exempt Organization Newsletter, Issue Number 2011-18. Topics include the following:

  • IRS Seeks Applicants for Advisory Committee on Tax Exempt and Government Entities
  • Reinstatement of Exempt Status after Automatic Revocation
  • Certain Small Organizations Not Required to File Application for Exemption Have Annual Filing Requirement
  • Filing Form 990-N for a Prior Year
  • IRS Survey of Exempt Organizations
  • Telephone Numbers for FBAR Hotline
  • Webinar on Reporting Employer-Sponsored Health Plan Coverage on Form W-2 Now Available on IRS Video Portal
  • Office of Professional Responsibility and Return Preparer Office Offer Free Webinar
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    IRS Releases Additional Guidance for Credit Counseling Organizations

    November 16, 2011

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    As we discussed in our Janaury 18, 2011 post, credit counseling and down payment assistance organizations are subject to special scrutiny by the IRS.  The IRS recently issued “Frequently Asked Questions” regarding credit counseling organizations, including factors the IRS considers to determine whether such organizations qualify under Section 501(c)(3).   This information is useful for new organizations as well as existing organizations to confirm the organization continues to operate within the IRS guidelines.

    Revised 990 Regulations

    Revised 990 Regulations

    November 5, 2011

    Authored by: Nathan Boyce

    Until recently, when an organization sought public charity status on its Form 1023 and received a favorable determination letter from the Internal Revenue Service recognizing it as exempt under Section 501(c)(3) of the Code, its public charity status (if granted) would be for a five-year “advance ruling period”. After this advance ruling period, the organization would make a separate filing to the IRS to establish public charity status based on satisfaction of one of the Support Tests. On September 7, 2011, final regulations were issued that change the timing and process of determining public charity status.  A brief description of the changes can be read here.