If your tax receipts are not out to donors by January 31, 2020, you’re behind according to the IRS. Tax receipts should be delivered within 30 days of year-end.
If you’re not sending a tax receipt to all your donors, make sure you know who MUST legally get a receipt in order for the station to remain in compliance with IRS rules. Here’s a summary of the exhaustingly detailed IRS Charitable Contributions: Substantiation and Disclosure Requirements.
Gift Timing and Gift Receipts
According to the IRS, “Only contributions made during the tax year are deductible. Credit card charges and payments by check are deducted in the year they are GIVEN to the charity, even though the 501(c)3 may not charge the credit card bill or have your bank account debited until the next calendar year.”
While you are not required to provide a receipt for all gifts, IRS Recordkeeping Rules state that to get a tax deduction, FOR ANY GIFT, donors at all levels must provide substantiation from either the bank or the donee. You may decide, as a convenience to your members, to provide tax receipts for all gifts.
A single statement may cover multiple contributions from the same donor.
You must provide a receipt for contributions:
- over $250 whether or not donors received a thank you gift
- over $111 and premium gifts were valued at $11.10 or more individually or in aggregate
- of at least $111 and the fair market value of gifts/benefits received is greater than $11.10
The receipt must include:
- Name of organization
- Amount contributed, or description of items donated
- Whether your station provided any goods or services in exchange for the contribution, other than those that can be disregarded under the insubstantial benefit rule (less than $11.10 individually or in aggregate).
- A description and good faith estimate of the fair market value of any good/services received that does not fall under the “low cost rule.”
Free, unordered, low-cost articles (mailing labels, note cards, etc. imprinted with organization name) are considered insubstantial and usually fall under the low cost rule. However, IF you bundle premiums, and the combined value of all items are over $11.10 then the tax deductible gift amount must be reduced by the combined value of all gifts.
There are no IRS forms for the acknowledgment. Letters, postcards, computer-generated forms or email messages with the above information are acceptable. An organization can provide either a paper copy of the acknowledgment to the donor, or an organization can provide the acknowledgment electronically, such as via an e-mail addressed to the donor.
Organizations typically send written acknowledgments to donors no later than January 31 of the year following the donation. For the written acknowledgment to be considered contemporaneous with the contribution, a donor must receive the acknowledgment by the earlier of: the date on which the donor actually files his or her individual federal income tax return for the year of the contribution; or the due date (including extensions) of the return.
Donated Premiums Still Have a Fair Market Value
If a premium has been donated to the station, the station must make a good faith estimate of a reasonable cost for that item. It doesn’t matter what the station PAYS, what matters is the cost an average person would pay to purchase the item (or a comparable item) at the retail level.
Research store ads, online offers and other sources to determine your station estimate of fair market value. Save a few copies of ads or online offers as documentation in the event you are audited and/or asked how you arrived at that estimate.
Caveats & Details
Celebrity presence (Cokie Roberts, Garrison Keillor, Ira Glass, etc.) adds no additional value. Dinner with celebrity guests has the same value as dinner without celebrities.
Members-only newsletters and programs not of commercial quality do not have to be included in determining the total FMV of gifts received. On the other hand, if your program guide is for sale on newsstands or to non-member subscribers, and if the subscription cost is more than $11.10 then you must disclose the guide’s fair market value to your member/subscribers.
by Virginia M. Dambach, U:SA Executive Director