August 21, 2008 | Read Time: 1 minute
The IRS has published proposed rules aimed at making sure donors keep proper records to prove they made gifts of cash and property to charities. And it has released new guidelines to clarify for its agents how to process applications for tax-exempt status from organizations that maintain donor-advised funds.
The charitable-gift proposal explains how the IRS plans to enforce recent laws that included provisions designed to cut down on abuses by donors and charities.
For example, the Pension Protection Act of 2006 said no tax deduction could be taken for gifts to charities of furniture, household goods, and clothing that are not in “good used condition or better.”
In its proposed rules, the IRS said that it and the Treasury Department are “aware that a number of charities publish donation guidelines listing items the charity will and will not accept, and believe that the guidelines are helpful in ensuring that charities receive donations of items that are of meaningful use to the charity.”
The revenue service said it welcomes comments from charities on how donation guidelines they publish may relate to the “good used condition” requirement in the law.
The IRS requests that all comments about its proposal be submitted by November 5.
The proposed rules were published in the August 7 Federal Register and are available online.
Meanwhile, the IRS released guidelines on donor-advised funds in response to tax-law changes made by the Pension Protection Act, which for the first time defined and set standards for such funds.
The funds allow people to donate cash, stock, or other assets to special accounts, claim a tax deduction for the gifts, and recommend how, when, and to which charities money in the account should be paid.
The guidelines are available at http://www.irs.gov/charities/charitable/article/0,,id=185378,00.html.
