Short version OK for 170(f)(8)?

By now we're all pretty much sensitized to how strict IRS and the courts are about getting a contemporaneous acknowledgement that complies with section 170(f)(8). My memory is that the cases have involved the absence of such, as opposed to incorrect or incomplete wording. I've noticed that most of the charities (but clearly not all) have caught up with the issue and are putting a version of the wording on the receipts, either programmed into their electronic receipt or, for those that send hard copies, pre-printed on the receipt.

I've seen a couple this year that sort of short cut the wording, which seems silly with automation but they do. For example, the American Heart Association's digital receipt has these 3 lines:
Transaction Amount:
Value of Goods/Services:
Tax Deductible Amount:

Is that good enough for 170(f)(8), the relevant part of which reads

if it includes the following information: ...
(ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).

. The reg. varies only slightly, as follows:

(ii) A statement of whether or not the donee organization provides any goods or services in consideration, in whole or in part, for any of the cash or other property transferred to the donee organization;

I think that Durden (TC 2012-140) shows that the receipt is not good enough. Durden was a pro se case and perhaps a more seasoned advocate could have made a better case for the taxpayer? But there is also Friedman (TC Memo 2010-45) and Kendrix (TC Memo 2006-9). Kendrix was also pro se, I cannot find Friedman.

Does Belair Woods provide relief if someone, donor or done, relied on competent tax advice?

Durden mentions Addis which reveals that the IRS, on occasion, looks beyond the statement when the effort may be merited.

In Durden, the only timely (contemporaneous) receipt said nothing about provision of goods or services.

Friedman was mostly about appraisals, but to the extent it discuss the issue in OP, it did away with an argument that the "goods or services' statement is only required when the donee actually provides goods or services.

Kendrix lost because of absence of the "goods or services" statement.

Addis was affirmed by the 9th Circuit, which said that while they received a "no goods or services" statement from the charity, it was not true and the Addises knew it.

Belair Woods addresses but does not decide whether reliance on a tax pro gets taxpayer the deduction, but more to the pint is about the appraisal, not the "goods or services" issue.

Sec 170(f)(8) requires a few here:
Content of acknowledgment. An acknowledgment meets the requirements of this subparagraph if it includes the following information:
(i) The amount of cash and a description (but not value) of any property other than cash contributed.
(ii) Whether the donee organization provided any goods or services in consideration, in whole or in part, for any property described in clause (i).
(iii) A description and good faith estimate of the value of any goods or services referred to in clause (ii) or, if such goods or services consist solely of intangible religious benefits, a statement to that effect.

Note that in (iii), it says, “…the value of any goods or services referred to in clause (ii).” Clause (ii), however, doesn’t just refer to goods/services provided, since clause (ii) is stated as a “whether” question. But that makes little sense, so I think clause (iii) needs to be read in reference to goods/services actually provided. That is, “the goods or services referred to in clause (ii)” refers to “goods or services in consideration.”

At first blush, a $0 entry next to “Value of Goods/Services:” on the acknowledgement letter doesn’t really tell us if goods/services were provided. A $0 entry could mean (1) goods/services were provided, but the value, as per the charity’s stipulation, is $0 or (2) no goods and services were provided whatsoever.

But at second blush, if clause (iii) really is to be read with reference to goods/services actually provided, then putting down a $0 value is an overt stipulation that we were provided with goods/services, but the value is $0. When no goods or services were provided, the charity shouldn’t put down a value of $0, because any inserted value – even $0 - is with reference to goods services actually provided (according to my reading).

Now, if the letter stated, “No goods or services were provided in exchange for your donation,” that answers clause (ii). By extension, it also answers clause (iii), because there is only one possible value that could be returned in such a situation and that is $0. But that doesn’t seem quite right, because we are stipulating a value ($0) in such a case to something that was provided to us, when the fact is, we were provided with nothing. It seems the better theory, as explained above, is that if the Letter states that no goods/services were provided, then clause (iii) is moot.

I go round & round with local charities & churches about the wording on their acknowledgement letters all the time. My stance is that they could cause "harm" to their donors if they don't do it right, so getting it right is important & they need to quit cutting corners. The IRS pretty much says "use these words" so why these charities don't want to "use those words" is beyond me. Most of the letters are 95% form letters, so why is it so hard to set up the form? I also emphasize that the regs also state that the donor is supposed to have the documentation in hand at the time they file the tax return, and I would assume that it means the CORRECT documentation. It may not be fixable later when the audit occurs.

The charity may not ever even know their donor was audited (& lost!) until they quit making those nice donations!

All helpful. Thanks. In the everyday world of tax preparers, what do you do when the wording for some reason, such as those discussed above, might be inadequate? Do you even read the receipts? Or just advise clients what is required and hope they look? I'm of the opinion that few clients would notice the presence or absence of the required statement and, even if told to check, would pretty much accept whatever is on the receipt. And why wouldn't they? The big charities have lawyers and accountants who have been (or should have been) consulted about the wording. Or are the IT staff just deciding what works for IRS?

My Heart Assoc example is real - it's my personal return. And it's not the only one that uses that approach. I'm guessing it would take a significant effort to get them to understand the nuances raised in this thread and take it all seriously. Yet all they need to do in 95% or more of the cases of a $250 or higher gift is use what Jeff-Ohio says: No goods or services were provided in exchange for your donation. It's short and to the point and meets what's required. I don't get why they play with it.

I don't get why they play with it.

There have been cases where the letter says, “No goods/services were provided”….but it turned out, that was wrong. Letter was deemed inadequate. We wonder what would happen in the reverse scenario: The letter basically stipulates that goods/services were provided (when they weren’t) [and the charity values those goods/services at $0, which, as noted, is oxymornic]. How can one provide goods/services valued at $0?

Oh, I see, they meant to say they provided nothing…not that they provided something with a $0 value. These are two different things, technically speaking.

There have been cases where the letter says, “No goods/services were provided”….but it turned out, that was wrong. Letter was deemed inadequate.. I'm aware of at least one where the letter provided was false, but I must have missed the ones where the letter had the right wording but was deemed inadequate. I'm actually thinking of contacting AHA and one other major charity to explain the issue to them and I'd like to see the cases first. Thanks.

But wait! Upon re-reading your comment, do you mean the statements were worded OK but were untrue and therefore "deemed inadequate"?

But wait! Upon re-reading your comment, do you mean the statements were worded OK but were untrue and therefore "deemed inadequate"?

Exactly. See, for example:

https://caselaw.findlaw.com/us-9th-circuit/1344680.html

Or are the IT staff just deciding what works... ?

A little off-topic, but I think that can be case at times, and nobody else checks it out. I get a monthly bank statement from a credit union where I have a very small ROTH IRA and a traditional IRA. The statement identifies both as an IRA. You have to dig down into the statement to see that one is in fact a ROTH. This happened when they revamped their statements and account numbering scheme a while back. Surely their internal coding of account types show that this is a ROTH, so why wouldn't they use the words ROTH IRA on the statement?

Another thing is on all receipts they show the only last 4 digits of the account number. But ALL savings accounts were given "100" appended to the account number when they did the revamp. So I get stuff that says ****5100 for the account number and I can't tell which of our accounts that is!!

Idiots...

What about:

1.170A-13(f)(8)(i) In General. — For purposes of section 170(f)(8), the following goods or services are disregarded--

1.170A-13(f)(8)(i)(A) — Goods or services that have insubstantial value under the guidelines provided in Revenue Procedures 90-12, 1990-1 C.B. 471, 92-49, 1992-1 C.B. 987, and any successor documents.

The argument would be that if the goods and services have insubstantial value, then it does not matter if any were provided. If none are provided, do most charities put "$0" or "none"?

If none are provided, do most charities put "$0" or "none"?

I can’t say what most charities do, but we know what Nilodop’s charity does…they put down $0. This, on a highly technical level, means that goods/services were provided, but have a $0 value. This is a false statement if no goods and services were actually provided.

Exactly. See, for example:

https://caselaw.findlaw.com/us-9th-circuit/1344680.html

Thanks, Jeff. THat's what I thought you meant. I had read that case. Addis was affirmed by the 9th Circuit, which said that while they received a "no goods or services" statement from the charity, it was not true and the Addises knew it.

I think it would take a highly technical agent to reason this as Jeff has, and there are plenty of them, I also think his Group Chief (do they still have those?) would overrule the agent, or Appeals or Tax Court would.

But these remain my overall questions: In the everyday world of tax preparers, what do you do when the wording for some reason, such as those discussed above, might be inadequate? Do you even read the receipts? Or just advise clients what is required and hope they look?

As a rural preparer with debt free clients in a no income tax state, I have few clients whose charitable contributions make a difference with the current standard deduction. Those with a multitude of smaller donations that ARE usable I don't look at since the potential error is insignificant and, since most data arrives here in the office in PDFs, no one is into scanning the various receipts. And I don't look at them anyhow. I usually look at a list with totals for each charity so I can knock out the obvious contributions to non-charities.

Interestingly, it is the clients whose income is less than the standard deduction, and who get a refund; that send along bunches of receipts from charities.

The larger contributions go to local churches which have the proper wording.

The largest contributions are conservation easements and I look at all the documents from the donee, as well as the appraisal carefully. So does the IRS!

Client just sent me his charitable donation acknowledgement that says:

"No goods or services were received by the church in return for the contribution."

Have seen lots like that.

I'll re-post this a little more enhanced.
"No goods or services were received by the church in return for the contribution."

Why the emphasis? Did you think we did not read it right?

Shouldn't it read "no goods or services were provided by the church for the contribution?

Yes it should. I thought that was your point in posting it.

Somewhere way back, maybe on TA, I pointed out some that read like that.