FundSvcs Community

Hi all,

I've received feedback from a couple donors that our receipts are not "IRS-compliant" because they aren't dated letters. The receipt does include the date the gift was received, which to my knowledge is the only date required for tax purposes, however, they are asking us to add the date the receipt was generated or printed. For reference, we include thank you letters which have the current date as a cover page for the receipt and if we send it via email there is a timestamp automatically added. 

Has anyone else received this feedback? Have the standards changed recently?

Thanks,

Meghan

Thanks, John and Isaac. I'm relieved we don't need to urgently update our receipt template, but it seems best to add the date going forward for good donor relations, and it certainly won't hurt.

There is complexity because the tax code includes three requirements, the written acknowledgement requirement (primary to prevent taxpayers from taking large-ish deductions without documentation from the charitable organization), a written disclosure requirement (primarily to prevent charitable organizations from soliciting gifts for which the donor receives something in return without being clear that the transaction is only partially deductible), and a record-keeping requirement for cash gifts (to require some sort of substantiation for all cash gifts, regardless of amount).

It's not a new issue, and it hasn't gotten any clearer.  I wrote this in, hmmm, 2017:

So here's the drill.  The written acknowledgement and written disclosure requirements, and the related financial substantiation regulations, have been around since the 1990s.  They do not include any requirement that a receipt include the date of the gift.  Publication 1771, discussing those requirements, does not indicate any need for a date of gift, and the examples, in that section, include a date of receipt (although a processed date would probably be a better choice)

At that time, cash gifts under the $250 threshold could be documented by, for example, a donor keeping a log of the contributions put into the offering plate at a religious institution, or into the donation boxes at Smithsonian museums.

Congress, in the Pension Protection Act of 2006, added a new requirement that applies only to cash transactions (cash, in this context, meaning cash/check/credit card).  This is in addition to the written acknowledgment requirement that still applies to transactions of more than $250.  This new requirement was considered a "record-keeping" requirement and says that in order to deduct a cash contribution, the donor has to have a bank record or written acknowledgment from the donee.  The record has to include the name of the charity, the amount of the contribution, and the date of the contribution.

Here's the thing.  If you read through the report of the Joint Committee on Taxation that led to the PPA, it's pretty clear that they thought that there was already a requirement that receipts under the written acknowledgment requirement had to include a gift date.  They weren't intending to add any requirement that wouldn't already be fully met by a written acknowledgment under the existing regulations.  They were just wrong about the date of gift currently being required.  So the record-keeping requirement, with the requirement that the record include the date of gift, was enacted into law.

So it's a mess.  I have never seen or heard any reports of the IRS attempting to enforce this requirement.  Folks out in the professional community who have spoken with IRS agents have reported that there is no interest in denying the deductibility of cash gifts lacking a date of gift on a written acknowledgment.  Publication 1771 punts on this question entirely-it discusses the written acknowledgment/substantiation requirement in one section, continuing not to include a date of gift and with the same examples featuring a date of receipt, and then, separately, states the record-keeping requirement, making no attempt to resolve the inconsistency date of gift issue.

So, basically, each charity needs to decide what it's going to do.  The arguments against putting a date of gift on a written acknowledgment remain compelling.  It slows down the data entry process to enter a date of gift, if you provide the date of gift you have to preserve the documentation supporting your determination, such as an envelope with a postmark, there are some gifts for which it is impossible to determine the date of gift like metered or business reply email, and putting information on a written acknowledgment is considered to be providing tax advice for which you can be held liable and fined if the donor relies on the information and the IRS or the courts subsequently considers it to be wrong.  On the other hand, the PPA does include a prima facie requirement that the donor have a record that includes the date of gift, and, if the donor does not have a check image or credit card statement with that information, they're looking to the donee to provide a record that complies with the statue.  The IRS basically doesn't care-or hasn't cared up to the present-but the requirement is still in the law, and the IRS also hasn't provided a safe harbor for using a date of receipt or processing date.

So, basically, you pays your money, and you makes your choice.

My US$0.02 worth; the usual disclaimers apply.

Good luck!

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Alan S. Hejnal (he/him)
Smithsonian Institution
Washington DC
hejnala@si.edu
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