Documenting Charitable Deductions--Don't Get Screwed by the Tax Code

Editor's Note: This article is part of our 2013 Tax Tips series. Robert Flach is an expert with almost 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.

NEW YORK (MainStreet) — I have written on this topic many times before here at MainStreet and at my blog The Wandering Tax Pro, but it is one that bears repeating.

The current monthly newsletter from the National Association of Tax Professionals, which I receive as a member, discussed the decision in David P. and Veronda L. Durden v Commissioner (TC Memo 2012-140).

It appears that in 2007, the Durdens donated a total of $22,517 to a qualified church in several separate contributions of more than $250 and claimed a deduction for this $22,517 on their 2007 Schedule A.

The couple's 2007 return was audited by the IRS in 2009. They produced cancelled checks and a statement from the church, dated January 10, 2008, that documented the full $22,517 they deducted. The IRS did not accept the documentation, because the statement from the church did not specifically indicate that no goods or services, other than intangible religious benefits, were provided in exchange for the donation.

The couple received a second statement from the church, dated June 21, 2009, that clearly indicated that no goods or services were provided. The IRS ignored this second statement, because it was not "contemporaneous". In order to be considered contemporaneous a statement must be received "before the earlier of the date the original tax return is filed or the extended due date of the tax return."

The first letter, dated January 10, 2008, was contemporaneous but did not contain the requirement statement. The second letter, dated June 21, 2009, contained the required statement but was not contemporaneous.