Writing Receipts
This page should contain procedures and rules for issuing reciepts.
Contents
Creating a Donation Receipt
Taxes and Laws
p1771 Article and Synopsis
This short article details how to write receipts, and other good stuff: http://www.irs.gov/pub/irs-pdf/p1771.pdf
According to this article, when we issue receipts we should be including the statement "no goods or services were provided in exchange for your contribution." This emphasises the fact that a financial donation is not required in order to gain access to our facilities. What I got out of the article was that it only really becomes important if someone donates in excess of $250 a year to our organisation, but there's no harm in including it in the receipt for any donation, regardless of whether their donations exceed $250 a year.
The article also makes clear that it is not our organisation's responsibility to ensure our donors get a receipt for their donations, it's the donors responsibility to keep records when including charitable deductions on their taxes. (Not that we shouldn't take it upon ourselves to do this, just that we're not in any legal trouble if we don't).
If we were to offer someone a benefit in exchange for a donation, and their donation exceeded $75, we would be responsible for issuing a receipt disclosing the fair market value of the benefit they received.
Example: Makers local charges $80 for an arduino class, and it comes with a free arduino. "Thank you for your donation of $80. With this donation you should have received a arduino valued at $30." It is then up to the donor to make sure he only claims $50 worth of donations. It's up to us to keep records showing that we informed them of the value of the benefit they received.
The article details the fiscal penalties we would incur if we did not provide this information.
Also in the article is a sentence confirming that an email is an acceptable form of a receipt.
We may want to consider making sure these receipts come from a makerslocal.org email address ([Jeff] was sending them from my personal address).
Talk from Corydon
This is non-legal advice from Corydon, it should be confirmed by checking IRS brochure on the issue http://www.irs.gov/publications/p561/ar02.html
- If an item is donated new, donor should submit to IRS the for the full amount
- Donor should use a standard fair method to determine depreciation. Corydon suggests 40% for each year item was in service.
- If an item is accepted by the 501c3 and then sold, donor can only claim the amount the item was sold for.
- If an item is accepted and then given away for fundraising purposes (ie, lottery prize), donor can claim fair market value
- http://www.irs.gov/pub/irs-pdf/p526.pdf
- at the top of page 2 is a chart "Table 2" that shows that you may not deduct as a donation the value a raffle ticket.
- If an non-cash donation is valued more than $500 by the donor, the donor must fill out a form to attach to his taxes: http://www.irs.gov/taxtopics/tc506.html
Since this discussion we have clarified that the 501c3 organization should issue a receipt for the item, and it is up to the donor to determine the value of the item being written off on their taxes. Omegix 09:14, 19 January 2010 (CST)
Conversations
13:27 Corydon76-dig Determining the value of donated property would be a simple matter if you could rely only on fixed formulas, rules, or methods. Usually it is not that simple. Using such formulas, etc., seldom results in an acceptable determination of FMV. There is no single formula that always applies when determining the value of property.
13:28 Corydon76-dig This is not to say that a valuation is only guesswork. You must consider all the facts and circumstances connected with the property, such as its desirability, use, and scarcity.
13:28 Corydon76-dig For example, donated furniture should not be evaluated at some fixed rate such as 15% of the cost of new replacement furniture. When the furniture is contributed, it may be out of style or in poor condition, therefore having little or no market value. On the other hand, it may be an antique, the value of which could not be determined by using any formula.
