Cash into weekly collection plate no receipts?

[FEDUKE404]

Playing loose with funds

....
A second objective is to establish that a client who has proper documentation (bank records for example), and who consistently gives less than $250 per gift, can legally claim their deductions even if they have no statement of any kind from the exempt organization. And that this is true even if total gifts to a single organization exceed $250 in a year - I have had conversations with tax preparers in the past who took the opposite position and I believe they are wrong.

But to play (ahem) Devil's Advocate here:

I knew a person who would regularly write a check to "XYZ Church" to cover the amount of coins collected in the Sunday School offering. (Yeah, this was some time ago, but checks normally were in the $75 - $125 range.) He was a coin collector and also a bit "slippery." Seems the IRS caught onto his little scheme...someone may have dropped a dime on him!!...before the stricter current rules ever appeared. (After that, he had to write the checks to "Cash.")

If I read you correctly, a person doing that in 2012 could legitimately claim the ~$5200/year "cash" contributions?

FE

[JohnH]

They couldn't LEGITIMATELY claim any deduction, and they would need the cooperation of at least one other person (unless the check writer were both the person receiving the funds from the plate and also the one preparing the bank deposit). And anyone trying such a stunt should consider the fact that that a loving Father disciplines His children when they misbehave or bring dishonor to His name.

I do know of a situation some years ago where someone contacted our church office asking for a receipt for cash dropped in the plate because they were being audited. We explained that we couldn't do that, but the amount they were asking us to verify was intriguing. It was more than the total cash deposited for the entire year. We still chuckle when that story comes up in finance committe meetings sometimes (no names mentioned, of course), but I imagine the church member wasnt laughing.

[veritas]

He was a piker

They couldn't LEGITIMATELY claim any deduction, and they would need the cooperation of at least one other person (unless the check writer were both the person receiving the funds from the plate and also the one preparing the bank deposit). And anyone trying such a stunt should consider the fact that that a loving Father disciplines His children when they misbehave or bring dishonor to His name.

I do know of a situation some years ago where someone contacted our church office asking for a receipt for cash dropped in the plate because they were being audited. We explained that we couldn't do that, but the amount they were asking us to verify was intriguing. It was more than the total cash deposited for the entire year. We still chuckle when that story comes up in finance committe meetings sometimes (no names mentioned, of course), but I imagine the church member wasnt laughing.

Now Joe Kennedy knew how to work the system.

"In providing the cash for Jack's campaign, Joe Kennedy used the Catholic Church and, in particular, Cardinal Cushing. One of the couriers told author Peter Maas how it worked:

"`For example, if Boston area churches had collected $950,000 on a particular Sunday from collections, Joe would write a check for $1 million to the diocese, deduct it as a charitable contribution, and receive the $950,000 in cash. Thus, in this example, the church got a contribution of $50,000, Joe could deduct the entire amount on his income tax, and he could use the money to pay off politicians without fear that it would be traced.'

[Lion]

Requirement

The church is only required to issue documentation re quid pro quo donations of $75 or more. And the 1098-C for donated cars and such. That's between the church and the IRS. Or any non-profit.

Between the church and its donors, they are likely to issue documentation to facilitate continuing donations and may have regulations to meet from their national church or organization!

[Jiggers]

Now Joe Kennedy knew how to work the system.

"In providing the cash for Jack's campaign, Joe Kennedy used the Catholic Church and, in particular, Cardinal Cushing. One of the couriers told author Peter Maas how it worked:

"`For example, if Boston area churches had collected $950,000 on a particular Sunday from collections, Joe would write a check for $1 million to the diocese, deduct it as a charitable contribution, and receive the $950,000 in cash. Thus, in this example, the church got a contribution of $50,000, Joe could deduct the entire amount on his income tax, and he could use the money to pay off politicians without fear that it would be traced.'

He probably found out that you can't buy yourself into heaven.

[Super Mom]

Had a new client that came in last week. All his contributions are in cash. He said "Have you ever been to the Catholic church? They pass that dish by you twice each time you go. You have to put something in it. You can write a check every time."

Told him that IRS now says you have to have receipts, either by your check or a letter from the church.

He understood but doesn't know how he can change it.

Linda, EA

My church has envelopes you can stick the cash in there, write your name real quick and the church tracks or he could bring envelopes from home maybe if Catholics don't do that??????

[DonPriebe]

My church has envelopes you can stick the cash in there, write your name real quick and the church tracks or he could bring envelopes from home maybe if Catholics don't do that??????

You won't find uniformity in the way donations are processed. At my church, all registered parishoners receive a bi-monthly pack of envelopes preprinted with their name and date. On Monday mornings a small group of people remove the cash or checks from the envelopes and verify that the amount written on the envelope is correct. They then deposit the proceeds in the bank and send the empty envelopes to the company that originally produced them. That company handles all of the accounting and produces the year-end statements. There are forms to record loose checks with the donor's name on them, or other identified donations from non-registered donors, but pure loose cash does not lead to a receipt.

[Burke]

Per Publication 1771: "A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or letter) showing the name of the charity, the date of the contribution, and the amount of the contribution."

This would indicate that the documentation given by the church MUST have the specific date of each contribution on it. It would also seem to indicate that a receipt showing the total amount only would not be acceptable.

I have represented a client in an audit for large charitable contributions. They had one letter/receipt from the church showing a total for the entire year. (One for husband and one for wife.) They also had all the cancelled checks. Accepted with no change or comment. I will add that this was probably over 6 years ago.

[Burke]

Just curious about something here.

If a church provided a complete statement to the donor showing date, amount, etc but forgot to put the "intangible religous benefit" boilerplate on the statement, would the taxpayer be at risk of losing the tax deduction if audited?

Yes, apparently. Recently read of court case where that happened. It may have also had the complication of not being comtemporaneous. But the lack of that wording was material in the court's decision.

[Burke]

Per Publication 1771: "A donor cannot claim a tax deduction for any contribution of cash, a check or other monetary gift unless the donor maintains a record of the contribution in the form of either a bank record (such as a cancelled check) or a written communication from the charity (such as a receipt or letter) showing the name of the charity, the date of the contribution, and the amount of the contribution."

This would indicate that the documentation given by the church MUST have the specific date of each contribution on it. It would also seem to indicate that a receipt showing the total amount only would not be acceptable.

Okay. I am going to qualify my earlier post with an observance. I am currently looking at a receipt from a local established church which says "In accord with IRS regulations, a more detailed breakdown of your contributions follows." And then it goes on to list every individual contribution for the year, and the qualifying wording about no goods or services. A summary page with the yearly total is also attached. Now, my question is, after reading all these posts, should I inform another (small) church, for many of whose members I do tax returns, that their one lump-sum receipt is not currently sufficient?

[Jiggers]

Okay. I am going to qualify my earlier post with an observance. I am currently looking at a receipt from a local established church which says "In accord with IRS regulations, a more detailed breakdown of your contributions follows." And then it goes on to list every individual contribution for the year, and the qualifying wording about no goods or services. A summary page with the yearly total is also attached. Now, my question is, after reading all these posts, should I inform another (small) church, for many of whose members I do tax returns, that their one lump-sum receipt is not currently sufficient?

I suggest you get IRS Pub 1771 and Pub 526.

1771 is extremely helpful for organizations.

While I don't think that there is any requirement that an organization provide any receipts, the donor must have something to substantiate his deduction.

If $250 or more in a single contribution, the donor needs that letter.

[Burke]

I agree with that. I guess the gray area seems to be, does it need to break down by amt and date each contribution made during the year. Or will one total figure suffice?

[powerage]

I actually had a client who put cash in the collection plate every Sunday, and kept track of it. He then went to the church office, showed them what he donated from his records, and they gave him the required documents, which I saw. I took the deduction.

[JohnH]

Interesting discussion we are having here. And relevant. I had a client come in today with a statement showing only a handwritten total on a printed sheet of paper and no "intangible religious benefit" wording - amount is a little under $4K. . He's a long-time client whom I know to be a regular giver, so there's no question in my mind that it's legitimate. He started attending this new church last year - it's a small church with a part-time financial secretary, so recordkeeping is nothing like it was at his former church.

I explained the rules as they apply to him and told him he needs to be sure he has copies of all checks. Then the magic question - "were any single checks over $250"? He said probably a couple. So we had THAT discussion, and he said he was sure the financial secretary would like to know about this.

He's going to pass the info along to her - maybe she will ask me for clarification. I told him to explain to her that she isn't violating any rules by not conforming the statement to IRS requirements, but what she is providing won't be much help to the donors in its present form if they should happen to be audited. Treading a fine line here...

This entire thread has been extremely helpful in thrashing out all the nuances of this issue. Lots of good input from all perspectives.

[LCP]

In the proposed regulations - I'll paste for you.

2) Bank record includes 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.

Thank-you. I was kind of pondering whether an ATM receipt dated Sunday morning showing a cash withdrawal might technically meet the requirement...... I guess not.