New substantiation requirements for charitable contributions.

• Author: Shapiro, Dina

The Revenue Reconciliation Act of 1993 (RRA) imposed new and more stringent substantiation and disclosure requirements on donors making contributions and on the charities receiving those contributions. Under these requirements, both the donor and the charity have increased responsibility for documenting these transactions.

Contributions of $250 or more made after Dec. 31, 1993 must be acknowledged by the charity in writing to qualify as a charitablc deduction; a canceled check will no longer be adequate. The donor must obtain the acknowledgment by the earlier of the date the return is filed or its due date (including any extensions).

The acknowledgment must specify the amount of the cash or check and a description of any noncash property contributed. It must state whether the charity provided any goods or services in return for the contribution. If so, the acknowledgment also must include a description and good faith estimate of the value of the goods or services or, if the goods and services consist solely of intangible religious benefits, a statement to that effect. The individual making the charitable contribution and claiming a charitable deduction is responsible for obtaining this information from the donee charity.

Separate payments generally will be treated as separate contributions and will not be aggregated for purposes of the $250 threshold. Additionally, for contributions paid by withholding from wages, the deduction from each paycheck will be treated as a separate payment.

Beginning Jan. 1, 1994, charities receiving "quid pro quo" contributions in excess of $75 must provide a written statement to the donor. A quid pro quo contribution is one in which the donor receives goods or services as a result of making the contribution.

The written statement must give a good faith estimate of the value of the goods and services provided, plus inform the donor that the charitable deduction is limited to the amount of the payment in excess of the value of the goods and services...