Proposed regulations: “Contemporaneous written acknowledgement,” donee reporting

Organizations may opt to file donee reports

The Treasury Department and IRS today released for publication in the Federal Register a notice of proposed rulemaking (REG-138344-13) to provide for “donee reporting” as an exception to the “contemporaneous written acknowledgement” rule for substantiation of certain charitable contribution deductions of $250 or more. The proposed regulations provide rules for the time and manner for donee organizations to file information returns that report the required information about contributions.

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Exception provided by donee reporting

Section 170(f)(8)(A) requires a taxpayer who claims a charitable contribution deduction for any contribution of $250 or more to obtain substantiation in the form of a contemporaneous written acknowledgement from the donee organization. Section 170(f)(8)(D) provides an exception to this requirement if the donee organization files a return that includes the required information.

The proposed regulations [PDF 230 KB] implement this exception for the first time and state that the Form 990 series of returns are not appropriate for use in donee reporting. Instead, the IRS intends to develop a specific-use information return for donee reporting. Donee reporting will not be required. It will be voluntary. 

Those organizations that opt to use donee reporting will be required to provide a copy of the information return to the donor (only the information related to that specific donor) including the donor’s name, address, and taxpayer identification number.

Unlike a notice of contemporaneous written acknowledgement, which is not sent to the IRS, the donee reporting information return will be filed with the IRS. The due date for filing such information return and furnishing a copy to the donor is February 28 of the year following the year in which the contribution is made. Those organizations that opt not to use donee reporting will need to continue to provide donors with a contemporaneous written acknowledgement.

Comments are requested on these proposed rules and whether additional guidance is needed to clarify the requirements for donors and donees. Comments must be received by a date that is 90 days after September 17, 2015—the date when the proposed regulations will appear in the Federal Register.

 

For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group:

D. Greg Goller | +1 (703) 286-8391 | greggoller@kpmg.com

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