Pension Protection Act of 2006

Background
On August 26, 2006 the Pension protection Act was passed into law and it included provisions relating to documentation of charitable donations.

Taxpayers claiming charitable contribution deductions for gifts made in taxable years beginning after August 17, 2006 will need to comply with the new rules for substantiation of contributions.  Since most individual taxpayers are "calendar year" taxpayers, they will not need to meet the new level of substantiation until they file their 2007 tax returns in April 2008.   Donors are required to provide a bank record, receipt, or other written evidence from the donee to validate the amount and date of the gift for any donations of cash, check, or other monetary gifts. 

IRS rules state that the following three points of information are required:

• The date of the contribution
• The amount of the contribution
• The name of the donee organization

If a donation is paid by check, is the canceled check enough?
YES.  The IRS rules state that the donor must maintain a bank record or a written acknowledgement.  A canceled check contains the three points of information required by the IRS.

How are payroll deduction rules applied?
IRS Notice 2006-110 explains how taxpayers who make charitable contributions by payroll deduction can meet the new recordkeeping requirements.  When a donor makes a contribution by payroll deduction, the donor must have the following documents to substantiate the deductions:

• A pay stub, W-2 or other document furnished by the employer that indicates the amount withheld during the tax year for payment to the donee organization and
• A pledge card/form or other document prepared by the donee organization that shows the donee organization name.
• The United Way of San Diego County is considered the donee organization for all donations processed through our United Way, regardless of where the donation is designated.
•  The United Way of San Diego County is the Principal Combined Fund Organization for purposes of the Combined Federal Campaign, and is considered the donee organization for all donations processed through our United Way, regardless of where the donation is designated.

Where can I go for answers to additional questions?
IRS website www.IRS.gov.