Does current tax law encourage charitable giving? According to National Taxpayer Advocate (NTA) Erin M. Collins in her annual report to Congress, the answer may be “no.” Donations to qualified charities can generally be deducted on the donor’s tax return. However, the donor must have received a written acknowledgement from the charity before filing a tax return, even if the donor has other documentation that substantiates the deduction. The NTA pointed out that this is inconsistent with Congress’s policy of encouraging charitable donations. To address this issue, she recommended that Congress modify the rules to require a reliable substantiation from a donee, but not necessarily in advance.
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