Christianity Today

Reach for your checkbook, not your wallet, the next time someone passes you the offering plate at church.

As of January 2007, taxpayers cannot deduct cash charitable contributions on tax returns without producing bank statements or charity receipts.

Writing a check or choosing automatic deduction from a bank account will meet the requirements, passed by Congress in August with the Pension Protection Act of 2006. Placing cash in an envelope marked with your name will also be recognized by the Internal Revenue Service (IRS), as long as the church provides a receipt or year-end statement. Until this year, the IRS accepted personal bank registers or handwritten notes recorded around the time of the cash donation.

"The smaller churches will be impacted, especially if they don't already give out year-end statements," said Christie Neagle, associate in stewardship and mission funding for the Presbyterian Church (U.S.A.). The denomination plans to inform its congregations, but she does not anticipate a decline in giving from the possible inconvenience.

Neither does Lars Bostrom, the director of administration and finance for the 1,300-member Grace Lutheran Church and School in River Forest, Illinois. "I don't think it will change the income that we receive," he said. "But they'll have to figure it out on their own. We try not to give tax advice."

Most people who put cash in the offering plate don't claim the itemized deduction anyway, he said. That's true for most Americans—two out of three claim the standard deduction and thus do not deduct charitable contributions. Of those taxpayers who do, many made large claims that they could not verify for the IRS, a Senate finance committee staffer told CT.

"This is better protection for churches," the staffer said. "There has been a very significant problem of embezzlement, because they weren't having to do full receipts. … This is to protect churches from embezzlements, so they will have better record keeping, and they'll have a better sense of where their dollars are."

Related Elsewhere:

The IRS has a summary of the changes and exactly what records you need for deductible contributions.

Christianity Today articles on money and business are available on our site.

Other articles include:

IRS cracks down on proof of gifts to charity | New 2006 federal tax laws that govern charitable contributions are cracking down on taxpayers who deduct donations to their house of worship without a receipt to prove it. (The Rapid City Journal)

It's better to gift and receipt under new tax rules | Curbs on donor inflation mean even small gifts now require documentation (NBC News)