Charitable contributions held to strict contemporaneous substantiation; clear proof not enough

The Tax Court has backed the IRS is denying a couple's charitable contribution deduction to their church because they lacked a contemporaneous written acknowledgement of their contributions. Although they had a letter from the church that gave the usual recitation of the amount of the donation and there being nothing of value received in return, the letter was not contemporaneous with the claimed deduction. Even showing the court the cancelled checks was not enough to waive the contemporaneous substantiation rule.

Background

The IRS did not question that the couple made the contributions or that they were made to a qualified charity. It nevertheless disallowed the charitable deduction on the ground that the contributions were not adequately substantiated.

Strict substantiation

The court strictly interpreted the rule in IRS regulations that requires a contemporaneous written acknowledgment for contributions of $250 or more. A written acknowledgment is contemporaneous only if it is obtained by the taxpayer on or before the earlier of: (1) the date on which the taxpayer files a return for the tax year in which the contribution is made or (2) the due date (including extensions) for filing such return.

The acknowledgment must include both the amount contributed and whether the charity provided any goods or services in consideration for the contribution (and, if so, a good faith estimate of their value). Cash donations of less than $250 can be proved by either a bank statement, cancelled check or written acknowledgment.

(Gomez, TC Summary Opinion 2008-93)