There are new rules regarding the treatment of cash donations for deduction purposes. Under the Pension Protection Act of August 2006 no tax deduction will be allowed for any contribution of cash, check or monetary gift unless the donor can provide a bank record or a written communication from the charity. The communication should include the name of the charity, date of contribution and the amount of the gift.
The new law is retroactive to the beginning of 2006.
For all gifts of $365 and greater, our acknowledgment letters clearly state WAMU, the date of your contributions, and the amount of your gift.
WAMU has long recommended that our members use credit cards, checks and other means to make contributions to the station.
Under this new environment, the importance of giving gifts other-than-cash will help WAMU be prepared to respond to you more quickly and more accurately.
Combined Federal Campaign donors...keep your CFC pledge/allotment form!
The Internal Revenue Service (IRS) has also announced new guidelines on how taxpayers can substantiate their contributions made to WAMU through payroll deductions.
As previously mentioned, changes in the recently signed Pension Protection Act of 2006 included a prohibition on charitable deductions for contributions of cash, check or other monetary gift and the taxpayer's requirement to maintain a bank record or a written communication from WAMU showing the station's name and the date and amount of the contribution.
For charitable contributions made via payroll deductions, the IRA is requiring two documents for donors to substantiate the gift and satisfy the requirement
- a pay stub, Form W-2 or other document furnished by the employer that sets forth the amount withheld from the taxpayer during a taxable year by the employer for the purpose of contributing to a charity
- a pledge card or other document prepared by or at the direction of the charity that shows the name of the charity
Donors who give to local United Ways or other organizations that funnel contributions to other charities (e.g. the Combined Federal Campaign) need to only obtain the pledge card or other document from the United Way and not from WAMU, which ultimately receives the money.
For Gifts of $250 and greater...keep your WAMU gift acknowledgment letter!
In addition, tax law requires that for any contribution of $250 or more, the taxpayer must substantiate the contribution by a contemporaneous written acknowledgement of the contribution by WAMU. The acknowledgement must contain:
- the amount of cash and a description of any property other than cash contributed
- a statement of whether or not the charity provided any goods or services in exchange for the contribution
- a description and good faith estimate of the value of any goods or services provided in exchanged for the gifts.
WAMU's practice is to include this information on the acknowledgment letters for all lump-sum gifts of $365 and greater. We are making a change to become fully compliant with this rule in 2007, by adding the date of the gift to all acknowledgment letters for donors contributing $250 and greater.
IMPORTANT NOTE: If you believe the information on WAMU's acknowledgment letter for your contribution(s) is incorrect, please contact WAMU's member service department at (202) 885-1252 or by e-mail to firstname.lastname@example.org. We will be happy to issue a corrected version of your annual gift acknowledgment letter.
WAMU members should also be aware that for payroll deductions, the contribution amount withheld from each payment of wages to a taxpayer is treated as a separate contribution for purposes of the $250 threshold. A taxpayer who gave $300 over the course of a year through payroll deductions would not trigger the $250 substantiation requirement.
This notice issued by the IRS is official, but temporary. The agency was expected to issue revised regulations in 2007, but WAMU is unaware of any revision yet released. The information above can and should be used until those such revised regulations become effective.
Meanwhile, WAMU is prepared and waiting for the chance to properly acknowledge your gifts under the new guidelines!