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November 14, 2012

IRS Takes Closer Look at Charities' Thanks to Donors

Recent cases in which the Internal Revenue Service successfully challenged tax deductions on gifts because the recipients' thank you notes did not do enough to affirm the donations as purely charitable have some tax advisers warning clients to better document their philanthropy, The Wall Street Journal writes.

The IRS requires donors to produce records for any gift above $250 showing that they did not receive any goods or services in return for the money. The agency won two court judgments this year revoking write-offs on donations, including a Texas couple's $25,171 gift to their church, because the thank-you notes the donors received did not make the lack of strings attached sufficiently clear.

"We've been alerting our clients," said William Fleming of PricewaterhouseCoopers, which reviews the thanks clients get from charities before submitting claims for tax deductions.