As your Springfield Missouri CPA we have compiled new changes in the way charitable deductions are processed. The following information may pertain to you as a charitable contributor.

The IRS has issued new procedural guidance regarding charitable deductions and reliance on exempt status. This guidance simultaneously combines four existing procedural rulings and updates them for recent changes.

Included in this procedural guidance is the transition from print into a searchable database for tax-exempt organizations. The database is called TEOS, or Tax Exempt Organization Search. The TEOS combines two new databases with three previous databases that were used when the print version in IRS Pub. 78 was discontinued in 2011. TEOS allows customers to search interactively across all five databases for the organizations they are looking for. “This new tool provides taxpayers an easy way to get information about charitable organizations,” said IRS Commissioner David Kautter.

Reliance

Grantors and contributors may rely on TEOS to determine whether a grant or donation will be deductible, but the database does not include separate listings for subordinate organizations that may cease to classify due to revocation. Reliance on the IRS databases should not apply for foundations and sponsoring organizations with actual knowledge that a revocation has occurred or was aware of (or responsible for) the act(s) that led to a revocation.

The TEOS system will allow users to access more information than previous platforms, is mobile friendly, and will eventually have tax-exempt determination letters on the system.

Safe Harbors

Safe harbors are provided for ensuring that the grantor or contributor will not be responsible for actions that result in an organization’s loss of public charity classification. This is given that the contributions from the grantor or contributor are 25% or less of the organization’s aggregate support for the preceding four tax years. In most cases, donors are able to rely on an organization’s tax-exempt status until the loss of exempt status is published on the IRS’s website. This safe harbor is not available to contributors who are in a place of authority, such as an organization manager.

If you have any questions about how charitable contributions could impact your tax return, please consult your tax consultant in our Springfield Missouri CPA office.