Hello again DONATION advisors. This blog post is only for those of you in the U.S.A.
A couple of users over the last week have advised me of a court decision that seems to require receipts from churches (or other religious organizations) to include wording saying that the donors received only “intangible religious benefits” in exchange for their donation. In the court decision, because that wording was not included, the donation was not allowed to be claimed as a tax deduction.
One reference on this that was brought to my attention is: http://www.openforum.com/articles/simple-tax-error-costs-couple-25000-deduction/. You can also see the IRS publication http://www.irs.gov/pub/irs-pdf/p1771.pdf.
So, I’m assuming I should change the wording:
“Pursuant to Internal Revenue Code requirements for substantiation of charitable contributions, no goods or services were provided in return for the Tax Deductible contributions”
to instead read something like:
“Pursuant to Internal Revenue Code requirements for substantiation of charitable contributions, no goods or services were provided in return for the Tax Deductible contributions, except for intangible religious benefits”.
First of all, do you agree with this change? Any better suggestions for how exactly to change the wording?
Obviously, this change should only be for churches or other religious bodies, so there will have to be a way in the program to specify that the organization is such a body. Perhaps an option on the Maintenance -> Receipt Options window?
While the program can change this wording on the built-in receipts for the U.S.A., I think existing users who are using the mail-merge version of the receipts will have to be instructed to add the wording in themselves, because I (and the program) cannot know whether they have already made such a change.
Obviously I need to do something about this very quickly, and advise users that they may need to send out corrected receipts with the revised wording.
Thanks in advance for any comments those of you in the U.S.A. have on this.