U.S. taxpayers routinely violate rules requiring them to prove the value of noncash contributions to charities, costing the government $1.1 billion in 2010, according to the Treasury Inspector General for Tax Administration.
Under U.S. tax law, noncash donations exceeding $500 must be accompanied by a tax form detailing the contribution and the recipient. The most valuable donations -- of art, historic building easements and items worth more than $500,000 -- require taxpayers to submit an appraisal.
The inspector general’s study of 507 tax returns found that about 60 percent didn’t comply with the rules. They didn’t file the correct forms or provide clear descriptions of what was donated.
In its response to the report, the Internal Revenue Service said it would request documentation from more taxpayers and revise the form.
The IRS also objected to the $1.1 billion figure. Peggy Bogadi, commissioner of the wage and investment division, wrote that donations that lack the proper paperwork aren’t necessarily ones that the IRS would disallow if it had all the information.