Tax Report: IRS Is Getting Less Charitable; New Regulations Raise the Bar On Gift Reporting
Don't lose your shirt when you give it away.</br></br>Many people who have donated used clothing, books, furniture and other household items to charity each year failed to get proper documentation for their gifts -- and thus could lose all or part of their deduction if challenged by the Internal Revenue Service, according to a recent government report.</br></br>Taxpayers and tax professionals "need to be better educated" about the rules for claiming charitable gifts, says the report by the Treasury Inspector General for Tax Administration, a U.S. Treasury Department unit. At the same time, the report urges the IRS to do a better job of enforcement.</br></br>One problem many donors face is understanding the property-donation rules, which can be complex. Even those who have mastered all the old rules may be unaware of new twists that became law last summer -- and thus affect returns for 2006 that taxpayers are filing now.</br></br>Based on a sampling of returns for the 2005 tax year, the Treasury report estimates that 101,236 taxpayers may have claimed unsubstantiated noncash gifts totaling about $1.8 billion. The report focused on noncash gifts other than vehicles and works of art.