Charity issues
The IRS has released two new publications dealing with car donations to charities.

In a separate notice, the IRS and the Treasury Department have advised taxpayers that the IRS intends to disallow improper charitable contribution deductions for transfers of easements on real property to charitable organizations and for transfers of easements in connection with purchases of real property from charitable organizations. Taxpayers claiming improper charitable contribution deductions for such transfers may be subject to accuracy-related penalties.

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...back to 1 July 2004


Further information:
www.irs.gov/newsroom/article/0,,id=124421,00.html
www.irs.gov/pub/irs-tege/pub4302.pdf
www.irs.gov/pub/irs-tege/pub4303.pdf
www.irs.gov/newsroom/article/0,,id=124485,00.html

Help for taxpayers making charitable donations
The IRS has issued reminders to taxpayers that, if they wish to reduce their taxes for 2003, their donations to tax-exempt charitable and religious groups must be made by the end of December.

The tax benefit for charitable contributions is only available for taxpayers who itemize deductions - about one-third of all filers. Those who take a standard deduction receive no additional tax benefit for their contributions.

Those itemizing deductions reduce their taxable income by the total contributed to qualified tax-exempt organizations, with some limits. The tax saving usually equals the deduction multiplied by the marginal tax rate - the top rate for the person's income level.

For example, an individual with a taxable income of $50,000 donates $2,000 to his or her church. The tax savings will be $500 - $2,000 times the taxpayer's marginal tax rate of 25 percent.

In 2000, the last year for which complete data is available, about 37.5 million taxpayers made deductible charitable contributions totaling nearly $140.7 billion. Of these gifts, nearly $98.2 billion were cash donations.

The IRS also reminds taxpayers to keep appropriate records to substantiate the value of their gifts. For example, for any single gift of $250 or more, a taxpayer must have a written acknowledgement from the charity by the earlier of the date the person files the tax return or the filing deadline, including extensions. A person donating property valued at more than $5,000 must obtain a qualified written appraisal.

Further information:
www.irs.gov/newsroom/article/0,,id=118196,00.html
www.irs.gov/pub/irs-pdf/p526.pdf
www.irs.gov/pub/irs-pdf/p561.pdf
...back to 4 December 2003

Credit counseling organizations
In October, the IRS issued advice and warnings to consumers who seek advice from tax-exempt credit counseling organizations. A useful summary of the issues faced by the IRS when considering applications from such organizations seeking section 501(c)(3) exemption is now available in the written testimony of Mark Everson, Commissioner of Internal Revenue, for the House Ways and Means Committee, Subcommittee on Oversight.

There is particular concern over organizations that are claiming to offer credit counseling services to low income customers but, in fact, are selling and administering debt management plans.

Further information:
www.irs.gov/newsroom/article/0,,id=114574,00.html
www.irs.gov/pub/irs-utl/credit_counseling_testimony_11202003.pdf
...back to 27 November 2003