The Disaster Tax Relief and Airport and Airways Extension Act of 2017 has provided certain relief provisions for contributions to qualified charitable organizations providing Hurricane relief in the disaster areas for Hurricane Harvey, Irma, and Maria. Eligible donations can be made to organizations beginning on August 23rd, 2017 and ending on December 31, 2017.
The Act will allow individuals and businesses to claim tax deductions for certain donations without the normal limitations that apply to charitable donations. As part of these relief provisions, donors making “qualified contributions” to organizations that have programs providing hurricane relief will be required to have written contemporaneous acknowledgement from the organization stating that their donation was or will be used to provide relief in the hurricane disaster area.
A “qualified contribution” must meet four requirements to be eligible for these relief provisions:
- The donation must be made in cash (and check) starting on August 23rd, 2017 and ending on December 31, 2017,
- The donation is made for relief efforts in the Hurricane Harvey, Irma, or Maria disaster areas,
- The taxpayer obtains from the organization contemporaneous written acknowledgement that states such contribution was used (or is to be used) for relief efforts in the three disaster areas,
- The taxpayer makes an election to have these relief provision apply to eligible contributions.
Qualified charitable organizations include churches, governmental, certain private foundations, and other 501(c)(3) public charities that have programs providing hurricane relief. Supporting organizations and donor advised funds are not eligible organizations under these rules. Other non-501(c)(3) organizations are not eligible to receive donations that are eligible for these tax relief provisions.
For organizations accepting eligible contributions, we recommend that the organization maintain records to show that the donated funds were used specifically for hurricane relief in the three disaster areas.
Those organizations will also need to modify their standard substantiation letters sent to eligible donors to include relevant information for the donor so they can apply the appropriate limitations to their donation. The letter should state the date of donation and the amount of cash received by the organization. It also should have some language that states the funds were or will be used in an eligible disaster area. We recommends language similar to “Thank you for your donation to ”Name of organization” for hurricane relief. We confirm that your donation will be used to provide hurricane relief in an eligible disaster area. Please consult your tax advisor for proper tax treatment of this donation.”
If the donor has made multiple donations throughout the year, the organizations will need to disclose eligible donations separately on their substantiation letter if eligible and non-eligible donations are included on the same letter.
Please contact Tax Senior Manager, Chris Ebert if you have any questions.