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  • 1.  End of Year Gifts Question

    Posted 11-01-2023 01:34 PM

    I am looking for a distinction between gifts mailed to a charity (what I've seen called the "mailbox rule"), and gifts sent by private courier services (UPS, Fed Ex, or hand delivered).  Our practice for counting for the currently ending calendar year is as follows:

    Mail:  Any checks (or cash) received in an envelope postmarked by USPS by December 31

    Private Service:  Received at our offices by December 31

    My gift officers are looking for an explanation for why there is a difference between an envelope postmarked by USPS by 12/31, and a package with an airbill showing a date of 12/31 or earlier.

    Publication 526 "When to Deduct" states "Checks. A check you mail to a charity is considered delivered on the date you mail it."   There is no mention of delivery service specifically.

    Perhaps our practices are wrong, and as long as there is an airway bill with a date showing receipt by the courirer by 12/31, those can be counted as delivered for the current year?

    I look forward to hearing what the correct interpretation of Pub 526 is, and why.  

    HELP!

    Thank you, Dale



    ------------------------------
    Dale Hailey
    Sutter Health Philanthropy
    dale.hailey@sutterhealth.org
    ------------------------------


  • 2.  RE: End of Year Gifts Question

    Posted 11-01-2023 01:40 PM
    Dale, I cover this in my annual date of gift summary. It's a bit early for me to send that out but look for it in the coming weeks. But here's the portion of the summary that addresses this topic. The short answer is that a gift can only be consider "given" when it has been transferred irrevocably. In most cases, these third parties - other than the USPS - allow senders to revoke the delivery until it has been accepted:

    The customary "legal" date of the gift for mailed contributions is the postmark date.  This, however, is not true for metered mail.  Nor does a postmark reflect the gift's legal date for other non-cash gifts like credit cards and stock donations.  For credit cards, regardless of when or how the donor tells you to debit their account, the legal gift date is the date the charge hits their account.  For stock, things get a bit more complicated.  If the donor mails it in, the gift date is the later of the two USPS (not metered) postmarks for the certificate and stock power. If DTCed, it's the date of DTC and NOT THE DATE THE DONOR TOLD THEIR BROKER TO TRANSFER THE GIFT.  For the gift to be consummated, the stock MUST be registered in your name or under the control of you or your legal agent.

    For items sent via third parties, like FedEx and UPS, the gift date is the date you sign for or take into your possession, the package, not the date it was sent (a donor can recall items "mailed" this way until you have signed for it - thus the item is still in their control until control is yours).


    John H. Taylor
    Principal
    John H. Taylor Consulting, LLC
    2604 Sevier St.
    Durham, NC   27705
    919.816.5903 (cell/text)

    Serving the Advancement Community Since 1987




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  • 3.  RE: End of Year Gifts Question

    Posted 11-02-2023 11:51 AM
    Hi Dale,

    It's not going to be satisfying to your gift officers, but the answer is an arbitrary "because."

    The word "mail" as used by the IRS always means US mail , since it is illegal for anyone besides the government to operate a mail service. Technically, FedEx, etc. operate something called a 'Private Express'. The IRS does explicitly state in the regs that for filing and paying taxes, private carriers on this list will also qualify for the and the "timely mailed is timely filed/paid" rule but it has not extended that to donation timing. 

    In short, if you don't use US mail, you default to the 'when received' timing rule. 

    Finally, keep in mind that these rules control when a donor can take a deduction, not when you are obligated to record the donation as received. It's fine for a contribution to count in '23 for the donor, but '24 for the charity. 

    Thank you,
    Isaac Shalev
    Data Strategy Expert
    Sage70, Inc.
    (917) 859-0151
    isaac@sage70.com

    Schedule a 30-minute consultation now:




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