Donation rule makes it easier for businesses to give

Business owners who qualify under certain IRS guidelines and want to help the community can skip a step when it comes to how they make donations.

A change to the tax code a few years ago makes it possible for a business to donate items to a recipient without first moving it through a nonprofit organization.

“After The Salvation Army combed through a lot of IRS stuff, what we discovered is we no longer have to take full possession of something before we can give it,” said Lt. Jon Tollerud, who runs the Wrangell Salvation Army. “Which is a very big benefit … let’s say somebody has a house fire and somebody has a refrigerator they want to donate, we don’t have to physically put it in our building for 24 hours before it can go to the new house.”

The nonprofit a business chooses to donate through would only need to fill out a receipt for the goods.

“In a hypothetical situation, if there was a house fire in Wrangell and (a business) wanted to donate a new stove, they could directly take it over there, and I could just write the donation receipt on behalf of (the business),” Tollerud said.

The Salvation Army receipt would record the donated item’s condition, not its value.

Not all nonprofits can be the middleman when it comes to non-cash donations, however. Religious groups, schools and hospitals, organizations like The Salvation Army, the Boy Scouts and Girl Scouts and war veterans’ groups are examples of eligible nonprofits.

Nonprofits excluded are such organizations as social and sports clubs, labor unions and political groups.

Not all businesses can gain tax benefits from donating items. It will depend on the business structure, and whether the owners itemize deductions or take the standard deduction.

Business owners unsure if they qualify for such deductions should check with their tax professional.

“It just makes it easier for the donor to be giving,” Tollerud said. “The nice thing is, in Wrangell, we already have a giving community.”

 

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