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Are Donations to Local Governments Tax Deductible?


March 27, 2013 by Bob Meinig
Category: Revenues

Are Donations to Local Governments Tax Deductible?

Local governments may accept donations, but are those donations deductible from the donor’s federal income taxes? In most cases, yes.

A gift to a local government entity is tax deductible if it is solely for “public purposes." The IRS Code, at 26 U.S.C. §170(c)(1), defines "charitable contribution" (which is tax deductible) to include "a contribution or gift to or for the use of":

A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.


Note that a local government – a city, county, or special purpose district – is considered to be a “political subdivision” of the state.

So, when would a gift to a local government not be “for exclusively public purposes”? I’m not a tax expert, but I would think that most gifts to local governments would be given only for public purposes. The IRS code does not specifically define “public purpose,” but it has been interpreted in part to mean that the contribution or gift must not be intended to benefit any particular individual. If a donor has any question about this, he or she should consult a tax expert.

What does a local government need to provide a donor to substantiate the gift for IRS purposes?  See IRS Publication 1771, "Charitable Contributions – Substantiation and Disclosure Requirements."

About Bob Meinig

Bob has written extensively on the state Open Public Meetings Act and on municipal incorporation and annexation. At MRSC, he has also advised local governments for over 25 years on diverse legal issues.

VIEW ALL POSTS BY Bob Meinig

Comments

"Is it possible in Washington State for a local government to give local and/or state tax credit in exchange for private property that is desired to be brought into public ownership?"

Russ Connole on May 14, 2013 9:06 AM

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