IRS issues relief for taxpayers deducting charitable contributions.Internal Revenue Service notice 95-15 provides relief to taxpayers deducting charitable contributions charitable contribution n. in taxation, a contribution to an organization which is officially created for charitable, religious, educational, scientific, artistic, literary, or other good works. of 250 or more who face substantiation rules imposed by Congress in the Omnibus omnibus: see bus. Reconciliation Act of 1993 (OBRA). Under OBRA, taxpayers are not allowed a deduction for a contribution of $250 or more unless they provide written acknowledgment acknowledgment, in law, formal declaration or admission by a person who executed an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment is made before a court, a notary public, or any other authorized person. from the donee The recipient of a gift. An individual to whom a power of appointment is conveyed. donee n. a person or entity receiving an outright gift or donation. DONEE. organization. The law requires that taxpayers obtain the acknowledgment before the return is filed. The IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. said it understood there was confusion about the new requirements and recognized that many taxpayers have had difficulty obtaining the required written acknowledgments. In light of this, notice 95-15 says the substantiation requirements will be considered satisfied if the taxpayer has * Obtained the acknowledgment by October 16, 1995. * Made a good faith effort to obtain the acknowledgment by that date (for example, sending the donee organization a letter requesting the acknowledgment). "Notice 95-15 shows that the IRS is increasingly aware of the difficulties it imposes on some taxpayers," aid Thomas A. Sherman, tax partner at Coopers & Lybrand in Minneapolis, and member of the American Institute of CPAs individual taxation committee. "This relief was driven as much by charities that had trouble setting up systems to send out the acknowledgments as it was by taxpayers complaining about the harshness of the law. I was very pleased to see the IRS react the way it did." Written acknowledgments of charitable contributions should contain * The amount of cash and a description (but not value) of any property other than cash contributed. * A description and good faith estimate of the value of any goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. provided in consideration for the contribution. |
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