ax professionals across New York are seeing more audit notices and requests for documentation related to charitable deductions.
The New York State Department of Taxation and Finance has not announced a specific audit campaign focused on charitable giving. However, large or unusual donation claims are receiving increased scrutiny, making proper documentation increasingly important.
What’s Driving the Increased Attention?
According to the New York State Department of Taxation and Finance, returns may be selected for audit when deductions appear excessive, when information does not align with third-party data, or when there are inconsistencies compared with prior-year filings.
Common Audit Triggers for Charitable Deductions
Some of the issues that may attract additional scrutiny include:
- Donations that are unusually large relative to income or significantly higher than in prior years
- Non-cash donations requiring valuation support
- Missing or incomplete documentation
- IRS adjustments that are shared with New York State
The Documentation Gap
Many taxpayers assume that a canceled check or credit card statement is sufficient documentation for a charitable contribution.
In reality, donations of $250 or more generally require a written acknowledgment from the charitable organization. Additional requirements apply to non-cash gifts and certain high-value contributions.
When documentation is incomplete, auditors may focus less on whether the donation was actually made and more on whether the taxpayer can legally substantiate the deduction.
What Should You Do Now?
If you claimed substantial charitable deductions, consider assembling the necessary documentation before any notice arrives.
Useful records may include:
- Donation receipts and acknowledgments
- Canceled checks and bank records
- Donor-advised fund statements
- Non-cash donation records and appraisals
- Correspondence from charitable organizations
Proper documentation can help make the audit process smoother and reduce the risk of a deduction being disallowed.
If you have received an audit notice or request for documentation, please contact our office before responding. Most notices include a response deadline, often approximately 30 days, and an accurate, timely response is important.
M. Kohn & Co. can help you review your documentation, respond to notices, and ensure your charitable contributions are properly supported.
Please contact us to discuss your needs. We are here and happy to help.
