Taxpayer contributed large amount to local church but fell within the 50% requirements. Taxpayer attached a copy of qualified substantiation from church showing total amount given. IRS has contacted taxpayer and advised her that substantiation from church is not enough; she also needs to supply copies of cancelled checks. However, her bank does not return copies of checks and she would have to request copies and pay a fee of $2.50 per check to bank to obtain copies. Have any of you ever run into this?? I did not handle tax return; but someone was telling me about the situation. Shouldn't the substantiation from church suffice??
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Not receiving copies of her checks from the bank was an election she made with her bank, when setting up that type bank account, and it is not the problem of the IRS. The IRS has a right to request whatever documents it wants and the taxpayer must provide them or argue as to why not. Tell her its in her best interest to obtain the copies. -
Old Jack,
While I agree with you about the IRS having the right to request any documentation they want, it is not always true that you can elect to not receive your checks from the bank. More and more banks will not return your checks to you. Even if you offer to pay a fee.
However, most banks that I have seen that have this policy, do include a copy of the checks in the bank statement. Front and Back.You have the right to remain silent. Anything you say will be misquoted, then used against you.Comment
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It is no longer a choice with the banks around here, none will return checks these days (I've checked them all). She might try pulling the checks off the bank's website, some are offering that capability, mine isn't charging a fee for that process, yet.Originally posted by OldJack
Daniel"A man that holds a cat by the tail learns something he can learn no other way." - Mark TwainComment
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This request does seem odd...
Usually it's the reverse, that the check would not suffice and they want substantiation from the recipient.
Doug
Originally posted by peggysiouxComment
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The reason
The reason banks can't return checks is that sometimes they never received them in the first place. Many, many transactions are handled electronically, and tracking down the actual checks is indeed difficult and expensive. The IRS can not make unreasonable requests but the taxpayer must comply with the substantiation rules to show not only that the church received the money, but also that the taxpayer was the one who gave it to them.
You will have to work something out. I would start with the check ledger supported by the monthly statements, which should be pretty convincing for the regular weekly or monthly amounts. You might also consider non-financial evidence, such as proof that the taxpayer participates in church at a level that suggests he is a major contributor, special recognitions and so on.Comment
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As I understand the current law, the copies provided by the bank are as legal and as good as the original, therefore the IRS would have to accept them as if they were the originals. Also, the bank must be in a position to provide such copies, albeit they may charge for the service. Therefore, I see not valid excuse for not obtaining the copies the IRS has ask for.Comment
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Online
B of A provides access online to checks written for the last two or three years. There is an image of the check which can be printed.Comment
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Show me
I would say to IRS, "show me" where it is in the law that I need canceled checks if I have a letter from the charity stating the amount given. As far as I know there is no such requirement so they should back down.Comment
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Contributions
Isn"t the requirement of the tax law that if contribution is $250. or more then cancelled
check is not valid proof that a statement from the receiving organization is required?Comment
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That is correct. Code Section 170(f)(8) only mentions the requirement to have a written acknowledgement of the contribution by the donee organization.Originally posted by Bird Legs
However, it has always been the policy of IRS to also require cancelled checks. In the case of a self employed taxpayer paying for things with cash, IRS will harass a taxpayer even if the taxpayer provides a receipt. The auditor will say you could have just picked up that receipt off the floor from someone else. They want the cancelled check in addition to the receipt.
What the IRS wants and what the law requires are often two different things. That is where your representation skills come into play. Often, IRS will back off when an EA or CPA gets involved that starts quoting all kinds citations supporting a client’s position. They generally will harass taxpayers without representation more so than those with representation.
I would call their bluff. Quote Code Section 170(f)(8) saying the acknowledgment letter is all that is required, and ask them to provide a citation that says the acknowledgement letter is not enough.Last edited by Bees Knees; 10-16-2006, 03:10 PM.Comment
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Why make a mountain out of a mole hill?
Why waste time arguing something that can be provided with little time and a few dollars?
It will cost the taxpayer more for representation than getting the checks and be done with it. Not to mention the IRS agent maybe looking a little closer at something else since you pi.... him off. Explain to the client and let the client decide how to go forward.Comment
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I agree. I was assuming the cancelled check could not be obtained from the bank, as some have suggested.Originally posted by OldJackComment
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Since the woman donated large amounts to her church I would surmise she has some assets. I would take my money out of that bank pronto if they charged me that kind of dinero.Comment
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