IRS wants receipts for tithes, offerings

The next time you toss cash into the churchcollection plate, you might want to ask the usher for a receipt. Newfederal rules for the 2007 tax year which took effect Jan. 1, forbidtax deductions for charitable donations unless the taxpayer can provethe donation through receipts or other official financial records. Therules, enforced by the Internal Revenue Service, require that peopleclaiming charitable donations back up those deduction claims withcanceled checks; records from banks, credit card companies or creditunions; or written notices from the charity or not-for-profitinstitution.

Inthe past, the IRS has allowed personal notes, diaries or bank registersas sufficient proof that you actually placed those $5, $10 or $20 billsin the basket each week of the year. Congress approved the newguidelines in August, as an add-on to the Pension Protection Act of2006, which deals mostly with pension and retirement savings. PresidentGeorge W. Bush signed them into law. The new rules cover monetarydonations to any charitable institution, not just religious ones.

Thechanges shouldn't affect the giving habits of people who already donatein church-provided envelopes, with checks, or over the Internet. Theycan still receive records from the church, bank or credit card company,and present them to their accountant. Still, a lot of money is givenanonymously. At St. Genevieve's Catholic Church in Elizabeth, N.J., forexample, nearly 20 percent of the $7,000 collected each week is cashthat the church cannot connect to anybody, said the Rev. George Gillen,the church's pastor.

The Islamic Center of Passaic County, oneof New Jersey's largest mosques, has not alerted members to the change,though it is less likely to feel a pinch. Less than 5 percent of itsdonations are anonymous, said Mazooz Sehwail, the mosque's officemanager. Cash donors who throw their bills unfettered into collectionplates must change their habits if they want to claim deductions, saidTodd Polyniak, a partner in Sax Macy Fromm & Co., a businessaccounting and consulting firm in Clifton, N.J.

In the end,Polyniak said, some not-for-profit organizations will bear the burdenof the new rules, because offering receipts for every cash donationwould strain their resources. "A lot of them don't have the resourcesto provide all this documentation," he said. "I feel the pain of thenot-for-profits more than for the government, but I can understand whythe government's doing it. ... The government is responding to whatthey perceive as abuse, and the way they see it, a lot of small dollarsadd up to big dollars."