Exempt Organizations Advisory - TIGTA Urges IRS to Improve Reporting Requirements for Noncash Charitable Contributions

On March 5, The Treasury Inspector General for Tax Administration (TIGTA) issued a report regarding compliance procedures for noncash charitable contributions, which estimated that 101,236 taxpayers claimed $1.8 billion in unsubstantiated noncash contributions between January 15 and September 21, 2006.

The TIGTA review evaluated the IRS’s implementation of a provision of the American Jobs Creation Act of 2004, which created additional reporting requirements for individual taxpayers making noncash charitable contributions, such as gifts of donated property, clothing and other items. Required substantiation includes the filing of Form 8283, Noncash Charitable Contributions, if charitable deductions claimed for noncash contributions exceed $500. If donated property exceeds $5,000, taxpayers are required to obtain signatures acknowledging receipt of the property and to include a qualified appraisal.

The TIGTA recommended that the IRS develop a comprehensive outreach plan on the reporting requirements for noncash charitable contributions for affected taxpayers and tax practitioners, as well as procedures to correspond with taxpayers to obtain missing Forms 8283 and supporting documentation. The IRS agreed to implement several TIGTA recommendations.

Read the complete list of recommendations.