Pension Protection Act of 2006
On August 26, 2006 the Pension protection Act was passed into law and it included provisions relating to documentation of charitable donations.
Taxpayers claiming charitable contribution deductions for gifts made in taxable years beginning after August 17, 2006 will need to comply with the new rules for substantiation of contributions. Donors are required to provide a bank record, receipt, or other written evidence from the donee to validate the amount and date of the gift for any donations of cash, check, or other monetary gifts.
IRS rules state that the following three points of information are required:
• The date of the contribution
• The amount of the contribution
• The name of the donee organization
If a donation is paid by check, is the canceled check enough?
YES. The IRS rules state that the donor must maintain a bank record or a written acknowledgement. A canceled check contains the three points of information required by the IRS.
How are payroll deduction rules applied?
IRS Notice 2006-110 explains how taxpayers who make charitable contributions by payroll deduction can meet the new recordkeeping requirements. When a donor makes a contribution by payroll deduction, the donor must have the following documents to substantiate the deductions:
• A pay stub, W-2 or other document furnished by the employer that indicates the amount withheld during the tax year for payment to the donee organization and
• A pledge card/form or other document prepared by the donee organization that shows the donee organization name.
• The United Way of San Diego County is considered the donee organization for all donations processed through our United Way, regardless of where the donation is designated.
• The United Way of San Diego County is the Principal Combined Fund Organization for purposes of the Combined Federal Campaign, and is considered the donee organization for all donations processed through our United Way, regardless of where the donation is designated.
Where can I go for answers to additional questions?
IRS website www.IRS.gov.
United Way of San Diego County is proud to follow the Association of Fundraising Professionals (AFP) Donor Bill of Rights. The Donor Bill of Rights was created by the AFP, the Association for Healthcare Philanthropy, the Council for Advancement and Support of Education, and the Giving Institute.
The Donor Bill of Rights
Philanthropy is based on voluntary action for the common good. It is a tradition of giving and sharing that is primary to the quality of life. To ensure that philanthropy merits the respect and trust of the general public, and that donors and prospective donors can have full confidence in the nonprofit organizations and causes they are asked to support, we declare that all donors have these rights:
I. To be informed of the organization's mission, of the way the organization intends to use donated resources, and of its capacity to use donations effectively for their intended purposes.
II. To be informed of the identity of those serving on the organization's governing board, and to expect the board to exercise prudent judgment in its stewardship responsibilities.
III. To have access to the organization's most recent financial statements.
IV. To be assured their gifts will be used for the purposes for which they were given.
V. To receive appropriate acknowledgement and recognition.
VI. To be assured that information about their donation is handled with respect and with confidentiality to the extent provided by law.
VII. To expect that all relationships with individuals representing organizations of interest to the donor will be professional in nature.
VIII. To be informed whether those seeking donations are volunteers, employees of the organization or hired solicitors.
IX. To have the opportunity for their names to be deleted from mailing lists that an organization may intend to share.
X. To feel free to ask questions when making a donation and to receive prompt, truthful and forthright answers.