Charitable Contributions

[erchess]

I believe that I understand what a client is supposed to have by way of substantiation of charitable contributions. That is not my question. My question is, suppose they write out for me the information I need to actually put on the return plus a statement that they have the receipts to back these up, and if they sign and I keep what they have written. Am I at risk of IRS Sanctions if at Audit it turns out that they have lied to me and they never had the substantiation?

Or on the other hand do I need to ask them to show me the receipts and perhaps even retain copies?

And is the answer to my due diligence in respect to charitable contributions different from the answer to due diligence in respect to any other alleged expense that if real and sufficiently documented is deductible?

[Bees Knees]

From TTA Update, posted on 4/18/2008

http://www.thetaxbook.com/updates/thetaxauthority_update_service/pdf/bulletin/4-18-2008-7_update.pdf

Other information related to tax return preparer penalties. The IRS website provides additional information that explains when a paid preparer may be subject to the Section 6694(a) penalty, and how to avoid the penalty. For example, if the taxpayer brings a tax organizer to an appointment with a tax return preparer and the organizer reflects that the taxpayer made certain dollar amount of charitable contributions, the preparer may rely in good faith without verification the information furnished if it does not appear to be incorrect or incomplete. The preparer, however, must still inquire about the existence of documentation in accordance with the appropriate reporting and substantiation requirements that apply to charitable contributions.

It says nothing about the client having to sign the organizer, or piece of paper for that matter. As long as the client has written down a figure, and we have informed the client about needing proper substantiation, then we should be off the hook for a penalty if an audit later reveals the client lied.

[ChEAr$]

Most of the time

From TTA Update, posted on 4/18/2008

http://www.thetaxbook.com/updates/thetaxauthority_update_service/pdf/bulletin/4-18-2008-7_update.pdf

It says nothing about the client having to sign the organizer, or piece of paper for that matter. As long as the client has written down a figure, and we have informed the client about needing proper substantiation, then we should be off the hook for a penalty if an audit later reveals the client lied.

it's not "should be off the hook", but that we are off the hook.

Unless... of course.. .. there are some signs that client is lying, maybe you pick up on
some kind of body language that puts a question in your mind...

we can't ignore implications.

[solomon]

Recently issued TD 9436 is clear on preparer responsibility (signing preparer) regarding 6662 (negligence portion) that would apply to the existence of and retention of records by the taxpayer.

(C) For returns or claims for refund that are subject to penalties pursuant to section 6662 other than the accuracy-related penalty attributable to a substantial understatement of income tax under section 6662(b)(2) and (d), the tax return preparer advises the taxpayer of the penalty standards applicable to the taxpayer under section 6662. The tax return preparer must also contemporaneously document the advice in the tax return preparer’s files.