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January 16, 2014

Are Churches Legally Required to Issue Statements for Every Contribution?

Reader: What about a one-time donation of only $10?

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We recently fielded this question from a church administrator in Virginia:

Is there a minimum gift amount for which a contribution statement must be issued? For instance, if someone visited the church one Sunday and dropped a $10 check in the offering plate, is the church obligated to send a statement?

Churches typically face this question in January, but also may encounter it throughout the year if they issue regular quarterly giving statements.

We did some research on this administrator's question. Attorney Frank Sommerville, an Editorial Advisor for Christianity Today's Church Law & Tax Group, provides this response:

No law requires the church to issue the donor a receipt. The receipt is issued as a courtesy to the donor to allow them to deduct their contributions. If the church issues a receipt, it should meet all the tax requirements to allow the donor to deduct the contribution.

[Based on this question] since the donation is less than $250, no receipt is required from the church for the donor to deduct the contribution. The cancelled check is adequate.

Richard Hammar further explains what donors need in order to deduct contributions of any size on their taxes in Chapter 8 of his annual Church & Clergy Tax Guide:

Donors cannot deduct a cash contribution to a church or charity, regardless of the amount, unless they keep one of the following:

* a bank record (a statement from a financial institution, an electronic fund transfer receipt, a canceled check, a scanned image of both sides of a canceled check obtained from a bank website, or a credit card statement) showing the charity's name, date of the contribution, and the amount of the contribution;

or

* a written communication (including "electronic mail correspondence") from the charity [a communication that must include specific information about the donation and the charity].
The substantiation requirements may not be satisfied by maintaining other reliable records.
Like Sommerville, Hammar cautions churches to provide charitable contributions statements that meet substantiation requirements for all contributions of $250 or more. Very specific information must be included on charitable contributions statements in order to make them valid for donors to use for tax-deduction purposes. Learn more about the specific information to include in the annual Church & Clergy Tax Guide or in this article from Church Finance Today.

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Related Tags: charitable contributions, giving, money, receipts, tax

Comments

According to the regulation, is a receipt needed only if an individual gift is over $200, or is a receipt needed if the annual accumulative amount is over $200? For example if someone gives $50 a month the total is over $200, but no individual gift is over $200. Would the donor need a receipt in order to claim these gifts on his taxes?

Mark,
The threshold is $250, and it applies to individual contributions, not the annual total. I suggest you download Publication 1771 from the IRS.gov website.

Mark,

I posed your question to Editorial Advisor Mike Batts. Here is his response:

"The donor must have EITHER a proper receipt from the church OR a canceled check or other bank record of the individual contributions of less than $250 each.

For individual cash contributions of less than $250, the donor is not required to have an acknowledgement from the donee organization, but if the donor doesn't have a proper acknowledgment, he or she must have bank documentation, such as a canceled check, or a bank statement showing the donee organization.

Donors are required to have proper "acknowledgments" (receipts/statements) with the required wording from the donee for all individual contributions of $250 or more. Technically, the law doesn't require the church to send them (other than for quid pro quo gifts over $75)--just that the donors "obtain" them.

Obviously, the implication is that churches should send charitable contributions statements as a courtesy to all donors. However, these statements do not have to be on paper. They can be electronic.

For online givers, if donors get a proper receipt in connection with their online gifts, churches don't need to duplicate the acknowledgment process--but the donor needs to make sure the acknowledgment from the online giving vendor contains the proper wording regarding the nature of their donations."

Blessings,

Matt

We do not mail out receipts for donations under $100 for the calendar year. Most are one time visitors However we print them and keep them in a file in case the donor calls and asks for the receipt at a later time. We have never had a call on these smaller amounts in the 10 years I have worked at this church

Why bother to print out and save the under-$100 statements? If the taxpayer doesn't receive it in a 'timely' basis - by April 15th of the following year is the IRS guidance - it doesn't do him any good.

For my church I usually pick a clip-point somewhere around $100 annual contribution and everybody above that gets a giving statement. This, although it is just a plain statement, is a thank-you for their support and reminds them we're still here. I do get comments back from folks thanking me for their statements, so I figure the $.50 each is well spent!
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Please note that this article applies to cash contributions. The rules about when an acknowledgement is required and what appears in it for non-cash contributions - from clothing to real estate - are many and get increasingly complex as the value goes up and estimating the value gets less definite.

Hi, I received a contribution from a church I have not been in since 2007 in the name of my deceased husband. Is this common practice for churches, who shld I report this to

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