I was sitting at a luncheon where Frank Sommerville, a leading nonprofit attorney, was providing an update on legal and tax issues. He brought up a 2012 tax court case where the IRS disallowed contributions in the amount of $25,171 because the church contribution tax receipt didn’t contain the right disclaimer.
In the case, Durden v. Commissioner, U.S Tax Court Memo 2012-140, the IRS disallowed this contribution. The critical disclaimer on the donors’ receipt was missing the phrase, “No goods or services were provided in exchange for these donations except for general religious benefits.” The case went on to say the omission could not be corrected by a new receipt issued after the taxpayers had filed their tax return.
At my church, we changed our software system this past year, but unfortunately the default message on our contribution receipts didn’t include this IRS required disclaimer. So before we printed and sent our year-end receipts, we made sure we changed the wording to include this disclaimer.
How about your ministry? Does your donation receipt contain this disclaimer? If not, your donors’ contributions can be disallowed by the IRS.
Enough said. Okay, time to go check your donation receipts!