Skip to comments.Claiming church donations at tax time more complex with new IRS rule
Posted on 01/20/2007 8:57:40 AM PST by WestTexasWend
WALNUT CREEK, Calif. - Placing a neatly folded bill or a clutch of coins into a collection plate as it passes along the pew calls up a Norman Rockwell image of American life.
But IRS rules taking effect this month may further change the way Americans contribute to houses of worship. The Pension Protection Act of 2006 prohibits donors from declaring contributions to churches or other charitable organizations unless they can produce records of the transactions.
Several clerics said they knew nothing about the change before a reporter called asking for comment.
"It probably will make a difference," said the Rev. Jerry Brown, the former pastor of St. Francis of Assisi Church in Concord, Calif., and the current pastor of Immaculate Heart of Mary in Brentwood, Calif.
Many clerics said they've seen a shift away from anonymous cash offerings. Personalized envelopes are common, and some churches have installed ATM-like machines to collect Sunday money.
Some larger churches accept monthly or yearly credit card payments.
"The Latino population tends to give cash, but the major bulk is giving electronically," Brown said.
"Many people give nothing" when the collection plate comes around, "but may have given $1,000 at the first of the month," said the Rev. Brian Joyce of Christ the King Church in Pleasant Hill, Calif.
The sweeping, nearly 1,000-page act addresses pensions and job-related savings plans. But it includes changes in charitable giving rules.
For one, donors must get bank or credit card statements or records from the charitable institution if they want to deduct those donations. The old rules required a paper trail only for contributions of $250 or more, said IRS spokesman Jesse Weller.
The rules only apply to those who complete a long-form tax statement and itemize deductions - about one-third of all taxpayers, Weller said.
Most churches provide an envelope with the donor's name or identifying number on it. Usually, a bookkeeper enters the amount in a computer and provides the congregants with a year-end statement.
Small, storefront churches without staffers or a network of volunteers may find the rules more onerous, said the Rev. Brian Stein-Webber, executive director of the Interfaith Council of Contra Costa.
"Computers are a godsend," he said. "Collection plates are standard practice. (The) most common way is in the plate, but (many use) a check or an envelope that is numbered and identifiable."
Among the 100 tax-law changes:
People 701/2 or older may contribute up to $100,000 from an IRA directly to a church or charity without penalty.
Those who give clothing or household items to charities cannot write off their value unless the donated items are in good condition.
The IRS has not yet defined what constitutes good condition, although Weller said a TV that does not work is a prime example of something that would not be allowable.
How about a TV that only gets ABC, CBS, NBC and CNN?
That is just wrong!
I'm not here to defend the IRS, but the rules on charitable giving have been changed by the Congress not by the agency. That means our elected officials including the President are the ones sticking it to us on this.
I have been in prolonged discussions with the GA Dept of Revenue over my charitable contributions.
I was told by one person that I needed to get a receipt from the usher when I put cash into the offering plate.
Still working through this problem.
Our church routinely prints out an itemized annual statement showing dates and amounts of donations, and mails it in January. This is perfect for the IRS and thus encourages larger donations.
It's easy enough. Just don't claim a tax deduction for doing something your faith says you should be doing anyway. [asbestos suit on]
Or write a check.... Why should the IRS rely upon your say-so that you gave cash to your church? Every other tax deduction requires documentation; there's no reason why churches should be any different. Either document your giving or quit yer yapping.
"Here, since you worked on so-and-so's campaign, I'll see that your health insurance gets paid and you'll have some flash money to boot. Plus, you'll have plenty of money to contribute to my campaign next year, won't you?
"Don't worry, you can fax in your work hours monthly from wherever you are at the time. Oh, and we'll give you office space, too, where you can make copies, use the phone at tax-payer expense, impress your friends by meeting them in the boardroom, etc.
"Oh, and every so often somebody will call up asking tax advice, but you know how that goes: no tax advice that you get from anyone other than a lawyer is expected to be right. Even the IRS gives faulty tax advice 50% of the time." HF
But who recommended the changes?
If the government says you don't have to pay taxes on money that you place into the offering, and then you don't claim that deduction then you are being a bad steward of your money. That additional 28% of your income that you are now giving to the government could have gone to furthering the ministry that you are supporting. IOW because you are granted a tax deduction, your charitable giving can be increased.
That is money that you can use to feed your family, to invest in your future or to contribute to the ministry you are supporting. Refusing to take a legitimate deduction is just plain stupid. Write a check or turn your offering in to the church office.
All my tithes and offerings are documented by church records. GA Dept of Revenue is not accepting the church record of donations.
But when you give alms, do not let your left hand know what your right hand is doing, so that your alms may be done in secret; and your Father who sees in secret will reward you.
Don't prooftext. If you and your treasurer are the only people who know that you are giving money to your church, the spirit of Mat. 6:3-4 is still fulfilled. The abuse which Mat. 6:3-4 is aimed at is people who give money ostentatiously, not those who do so quietly with a check.
How can I have fun with an IRS agent if you are going to tell me not to prooftext the scriptures?
I agree with litekeeper on this one.
Some folks give by cash, some churches don't have the staff to track these things, and I'm sure there are other issues.
The main thing that bothers me though is the 1st Amendment:
"Congress shall make no law respecting an establishment of religion or prohibiting the free exercise thereof."
1. They've just told churches how to run their financial records.
2. They've just told me that my donations can be taxed EVEN THOUGH they are part of my act of worship.
Better if we did not have an income tax with deductions. Either get rid of the income tax or get rid of deductions. Or both.
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